BLBG:Yen Rises as Lack of BOJ Nominee Consensus Tempers Easing Bets
The yen climbed against all major peers as a lack of unity among Japanese lawmakers for the government’s picks to run the Bank of Japan (8301) damped expectations for accelerated monetary easing.
Bullish bets on the yen in the options market climbed to a nine-month high after Japan’s largest opposition party said it would vote against BOJ deputy governor nominee Kikuo Iwata, an advocate of quantitative easing since the 1990s. Demand for the dollar was supported before U.S. data today that may show retail sales rose for a fourth month. New Zealand’s currency fell before the nation’s central bank sets monetary policy tomorrow.
News on Iwata “has helped knock down dollar-yen,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “It has gone way beyond what you can justify in terms of relative economic fundamentals and prospective action by the central bank.”
The yen rose 0.5 percent to 95.63 per dollar as of 2:27 p.m. in Tokyo and gained 0.4 percent to 124.70 per euro from yesterday. The dollar was little changed at $1.3038 per euro after rising 0.1 percent yesterday.
The three-month dollar-yen risk reversal rate slid to negative 0.0825 percent, a level unseen since June 11, indicating increased demand for options that grant the right to buy the Japanese currency versus the greenback.
Your Party said today it will oppose Haruhiko Kuroda’s nomination for BOJ governor and Hiroshi Nakaso for deputy, while supporting Iwata. The Japan Restoration Party said it will endorse Kuroda and Iwata and oppose Nakaso. The main opposition Democratic Party of Japan said yesterday it opposed Iwata because he advocates changing the central bank law to give the government more control in setting policy.
New Leadership
Current Governor Masaaki Shirakawa is due to step down along with two deputies on March 19. Iwata may be confirmed without backing from the DPJ if Prime Minister Shinzo Abe can secure the support of the smaller opposition parties.
The yen has tumbled 7.8 percent this year, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, amid expectations a new BOJ leadership will boost cash infusions. The dollar rose 2.8 percent on signs the U.S. recovery is gathering pace.
The Commerce Department will probably say today that U.S. retail sales increased 0.5 percent in February from a month earlier when it rose 0.1 percent, according to a Bloomberg News survey of economists. The American unemployment rate dropped in February to the lowest since December 2008, government data showed last week.
Reserve Bank of New Zealand Governor Graeme Wheeler will probably keep his country’s key interest rate at an all-time low of 2.5 percent tomorrow, according to all 16 economists surveyed by Bloomberg News. There’s a 74 percent chance the rate will stay there by the Oct. 31 policy decision, swaps data compiled by Bloomberg show.
The New Zealand dollar fell 0.1 percent to 82.61 U.S. cents.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
