Bloomberg News

Yen, Dollar Weaken as Stock Gains Sap Safety Demand; Won Rises

November 29, 2011

Nov. 29 (Bloomberg) -- The yen and dollar weakened against most major peers as Asian stocks extended a global rally, sapping demand for haven currencies.

The yen touched an almost four-week low versus the dollar as Finance Minister Jun Azumi said he was continuing efforts to maintain appropriate exchange-rate levels. The euro rose for a second day against the yen as European financial chiefs prepare to meet today to seek a resolution to the two-year debt crisis. The won rose after South Korea posted a current-account surplus.

“In a risk-on environment, the U.S. dollar and the yen are two currencies that are going to weaken,” said Thomas Averill, a director at the currency and interest-rate risk management company Rochford Capital in Sydney. “We’re just seeing short- covering in other pairs” involving so-called risk currencies. A short position is a bet a currency will weaken.

The yen dropped 0.3 percent to 104.22 per euro as of 2 p.m. in Tokyo. The Japanese currency touched 78.29 per dollar, the weakest since Nov. 2, before trading at 78.07. The greenback lost 0.2 percent to $1.3350 per euro.

The MSCI Asia Pacific Index of regional shares rose 1.1 percent, after the Standard & Poor’s 500 Index jumped 2.9 percent in New York yesterday.

The yen has strengthened 9.6 percent over the past six months, the best performance among 10 developed-nation currencies tracked by the Bloomberg Correlation-Weighted Indexes.

Japan Intervention

“Volatility is high” for the yen, Azumi said in parliament in Tokyo today. “I would like to continue my efforts to keep the currency level a bit more appropriate.”

Azumi’s comments came almost one month after Japan carried out its third intervention in markets this year to stem currency gains that threaten an export-led economic recovery. The yen reached a postwar high of 75.35 per dollar on Oct. 31, spurring the government to sell an estimated 8 trillion yen ($102 billion) that day, a record for a one-time operation.

Euro-area finance ministers will convene today in Brussels for two days of talks. They will follow up discussions during a Group-of-20 meeting earlier this month as governments try to regain financial markets’ confidence.

Europe’s common currency fell earlier after Moody’s Investors Service said it’s considering lowering ratings on subordinated debt at banks in 15 European nations, reflecting the potential removal of government support. Lenders in Spain, Italy, Austria and France have the most ratings to be reviewed it said.

Italy Bond Sale

Italy will sell today a total of 8 billion euros ($10.7 billion) debt in maturing in 2014, 2020 and 2022. Belgium is scheduled to offer 1.4 billion euros of bills today.

The euro is likely “to come under a little pressure for the rest of the week,” said Michael Turner, a fixed-income and currency strategist at Royal Bank of Canada in Sydney. “There’s still a bit more bad news to come out of Europe over the next couple of weeks.”

South Korea’s won strengthened against all of its 16 major counterparts. The Bank of Korea today said the nation’s current- account surplus was $4.23 billion last month, compared with a revised $2.83 billion in September.

“There are several favorable factors for the currency market today; the global stock market gains and the current- account surplus” said Ha Jun Woo, a Seoul-based currency dealer at Daegu Bank. “Many investors who were betting on a strong dollar may change positions today, which will support the won.”

‘Favorable Factors’

The won jumped 0.6 percent to 1,147.23 per dollar. The current account is the broadest measure of trade, tracking goods, services and investment income.

Japan’s imports exceeded exports by 332.4 billion yen in the first 10 days of this month, the Ministry of Finance said today. The country posted a 273.8 billion-yen trade deficit in October.

“The trade deficits are making people reluctant to buy the yen,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin- trading services. “Europe’s debt problem is spilling to Japan.”

--With reporting by Jiyeun Lee in Seoul. Editors: Rocky Swift, Naoto Hosoda

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.


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus