Yen Advances on Talk Japan to Rein in Sales of Its Own Currency
16/3/2004 12:12
The yen rose for a third day in London on speculation Japan will decrease currency sales after a government report showed an economic recovery is spreading to consumers, reducing the need to protect exporters' earnings.
Japan's Nikkei Financial Daily reported today in its BOJ Watch column that the Bank of Japan may ``walk away from large- scale'' sales after March 31, the end of the country's fiscal year. Finance Minister Sadakazu Tanigaki said policy hasn't changed.
``Given the magnitude of intervention we saw in January it wouldn't be a surprise to see it slow down,'' Monica Fan, head of European currency strategy in London at RBC Capital markets, said in an interview. ``If officials do step away the risk is that the yen moves from 110 to 105.''
Against the dollar, the yen climbed to 109.61 at 9:15 a.m. in London, according to EBS prices, from 110.31 late yesterday in New York. Versus the euro, the dollar weakened to $1.2326 from $1.2264 on expectations the Federal Reserve will maintain a commitment to be ``patient'' before raising its target interest rate from a 45-year low when policy makers meet today.
The Bank of Japan said today the world's second-biggest economy is ``recovering gradually,'' and ``private consumption is currently showing some positive movements.'' Merrill Lynch & Co. said enthusiasm among overseas investors for Japanese stocks has risen to the highest since April 1999, according to a monthly survey of global fund managers by the company.
Fed Meeting
The euro's gain may accelerate after about $1.2335, which until March 2 was the lowest level this year, said Nick Parsons, head of currency strategy at Commerzbank AG in London. A rally much beyond that point would signal further gains for the euro, which is down 2 percent this year. It added 20 percent versus the U.S. currency in 2003.
The Fed will wait until 2005 to raise its key interest rate from 1 percent, economists at 10 of the 23 primary government securities dealers, which trade with the central bank, predicted in a Bloomberg survey published yesterday. In December, just six of those economists said the Fed would wait that long.
``Any rate hike is not likely this year,'' said Harvinder Kalirai, head of market research and analysis in Sydney at State Street Corp., the world's largest custodian of assets. The dollar may fall below 100 yen and $1.30 per euro this year, he said.
A level of about $1.2335 was the final stage of a so-called double-top trading pattern, which the euro completed on March 2, said Parsons. A double-top is when a currency twice fails to extend new highs and then tumbles beyond a previous low.
``The leaves the euro poised to do better,'' he said.
Currency Policy
The yen rose to 109.20 yesterday in New York trading, the strongest since March 2 after the Nikkei report was published. The BOJ tried to stem the gain by selling yen in Tokyo trading, said traders at banks that deal with the central bank.
``There is no change in our policy,'' Tanigaki said at a press conference in Tokyo. ``We will firmly maintain our policy of taking appropriate action if there are rapid moves in foreign exchange rates.'' The Ministry of Finance tells the central bank to buy or sell. Last year, Japan sold a record 20.5 trillion yen.
Japan may have spent as much as $1 billion buying dollars and selling yen today, said traders including Minoru Shioiri, senior manager of the treasury and foreign exchange division at Mitsubishi Securities Co. in Tokyo.
The country's economic rebound may make it harder for Japan to win backing for its currency sales from officials in Europe and the U.S., whose manufacturers have said the selling gives Japanese exporters an unfair advantage.
`Answer Is No'
Fed Chairman Alan Greenspan said this month in a speech in New York that ``the current performance of the Japanese economy suggests we are getting closer to the point where continued intervention at the present scale will no longer meet the monetary policy needs of Japan.''
``Maybe Japan can keep on printing money forever and buying dollar assets, but will the U.S. allow this?'' asked Jake Moore, currency strategist in Tokyo at Barclays Capital Inc. ``If Greenspan's comments last week are to be taken seriously -- and they are -- the answer is `no.'''
The BOJ, which acts for the finance ministry in the currency market, sold 10.5 trillion yen ($94.4 billion) in the two months ended Feb. 25, more than half of the annual record amount spent last year, to keep the yen from gaining.
``Anybody who believes Japan is going to step away on April 1 and let dollar-yen plunge through 100 would be sadly mistaken,'' said Peter Clay, a currency strategist in Sydney at ABN Amro Holding NV. ``It will go there, but it will have to negotiate intervention at various stages.''
Demand for Yen
Japan's currency has gained 7.4 percent against the dollar in the past year as foreign investors put more money into the nation's stocks, betting on an improving economy. Optimism in the world's second-largest economy helped boost the Nikkei 225 Stock Average 43 percent in the past year.
Thirty-six percent of managers surveyed by Merrill said they plan to increase their holdings of Japanese shares, up from last month's 19 percent. Those who plan to reduce their holdings declined to 4 percent from 12 percent, it said.
Japan's Nikkei Financial Daily reported today in its BOJ Watch column that the Bank of Japan may ``walk away from large- scale'' sales after March 31, the end of the country's fiscal year. Finance Minister Sadakazu Tanigaki said policy hasn't changed.
``Given the magnitude of intervention we saw in January it wouldn't be a surprise to see it slow down,'' Monica Fan, head of European currency strategy in London at RBC Capital markets, said in an interview. ``If officials do step away the risk is that the yen moves from 110 to 105.''
Against the dollar, the yen climbed to 109.61 at 9:15 a.m. in London, according to EBS prices, from 110.31 late yesterday in New York. Versus the euro, the dollar weakened to $1.2326 from $1.2264 on expectations the Federal Reserve will maintain a commitment to be ``patient'' before raising its target interest rate from a 45-year low when policy makers meet today.
The Bank of Japan said today the world's second-biggest economy is ``recovering gradually,'' and ``private consumption is currently showing some positive movements.'' Merrill Lynch & Co. said enthusiasm among overseas investors for Japanese stocks has risen to the highest since April 1999, according to a monthly survey of global fund managers by the company.
Fed Meeting
The euro's gain may accelerate after about $1.2335, which until March 2 was the lowest level this year, said Nick Parsons, head of currency strategy at Commerzbank AG in London. A rally much beyond that point would signal further gains for the euro, which is down 2 percent this year. It added 20 percent versus the U.S. currency in 2003.
The Fed will wait until 2005 to raise its key interest rate from 1 percent, economists at 10 of the 23 primary government securities dealers, which trade with the central bank, predicted in a Bloomberg survey published yesterday. In December, just six of those economists said the Fed would wait that long.
``Any rate hike is not likely this year,'' said Harvinder Kalirai, head of market research and analysis in Sydney at State Street Corp., the world's largest custodian of assets. The dollar may fall below 100 yen and $1.30 per euro this year, he said.
A level of about $1.2335 was the final stage of a so-called double-top trading pattern, which the euro completed on March 2, said Parsons. A double-top is when a currency twice fails to extend new highs and then tumbles beyond a previous low.
``The leaves the euro poised to do better,'' he said.
Currency Policy
The yen rose to 109.20 yesterday in New York trading, the strongest since March 2 after the Nikkei report was published. The BOJ tried to stem the gain by selling yen in Tokyo trading, said traders at banks that deal with the central bank.
``There is no change in our policy,'' Tanigaki said at a press conference in Tokyo. ``We will firmly maintain our policy of taking appropriate action if there are rapid moves in foreign exchange rates.'' The Ministry of Finance tells the central bank to buy or sell. Last year, Japan sold a record 20.5 trillion yen.
Japan may have spent as much as $1 billion buying dollars and selling yen today, said traders including Minoru Shioiri, senior manager of the treasury and foreign exchange division at Mitsubishi Securities Co. in Tokyo.
The country's economic rebound may make it harder for Japan to win backing for its currency sales from officials in Europe and the U.S., whose manufacturers have said the selling gives Japanese exporters an unfair advantage.
`Answer Is No'
Fed Chairman Alan Greenspan said this month in a speech in New York that ``the current performance of the Japanese economy suggests we are getting closer to the point where continued intervention at the present scale will no longer meet the monetary policy needs of Japan.''
``Maybe Japan can keep on printing money forever and buying dollar assets, but will the U.S. allow this?'' asked Jake Moore, currency strategist in Tokyo at Barclays Capital Inc. ``If Greenspan's comments last week are to be taken seriously -- and they are -- the answer is `no.'''
The BOJ, which acts for the finance ministry in the currency market, sold 10.5 trillion yen ($94.4 billion) in the two months ended Feb. 25, more than half of the annual record amount spent last year, to keep the yen from gaining.
``Anybody who believes Japan is going to step away on April 1 and let dollar-yen plunge through 100 would be sadly mistaken,'' said Peter Clay, a currency strategist in Sydney at ABN Amro Holding NV. ``It will go there, but it will have to negotiate intervention at various stages.''
Demand for Yen
Japan's currency has gained 7.4 percent against the dollar in the past year as foreign investors put more money into the nation's stocks, betting on an improving economy. Optimism in the world's second-largest economy helped boost the Nikkei 225 Stock Average 43 percent in the past year.
Thirty-six percent of managers surveyed by Merrill said they plan to increase their holdings of Japanese shares, up from last month's 19 percent. Those who plan to reduce their holdings declined to 4 percent from 12 percent, it said.
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