Yen Rises as Exporters Repatriate Funds, Investors Bet Drop Was Too Rapid

The yen gained against 15 of its 16 major peers on speculation Japanese exporters were taking advantage of recent declines to bring home overseas earnings.

Japan’s currency climbed for a second day versus the dollar, its first back-to-back gain in two weeks, as traders bet that the yen’s drop to a nine-month low yesterday was too rapid. The 17-nation euro advanced against the greenback before the European Central Bank allots a second round of unlimited three- year funds tomorrow to help shore up the region’s banks.

“There’s talk of month-end-related repatriation by Japanese exporters,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This seems to be pushing the yen up.”

The yen advanced 0.4 percent to 80.29 per dollar as of 1:59 p.m. in Tokyo, adding to yesterday’s 0.7 percent gain. It fell as low as 81.67 yesterday, the weakest since May 31. Japan’s currency climbed 0.1 percent to 107.89 per euro. Europe’s common currency rose 0.3 percent to $1.3436.

The prospect that some Japanese companies and investors will need to repatriate earnings by the end of the fiscal year on March 31 may also be providing a spur to demand.

The dollar weakened against the yen as the greenback’s 14- day relative strength index dipped to 67.8 today, having held above 70 since Feb. 16. Some traders see RSI levels above 70 as a sign an asset may reverse direction. The euro’s RSI versus the yen stood at 71.1.

“The dollar and euro have risen too rapidly against the yen,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd. “Position adjusting, combined with a general risk-off mood in the market, is likely to put upward pressure on the yen.”

The Japanese currency has weakened 6.2 percent in the past month, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has lost 1.3 percent and the euro has gained 0.4 percent over the same period, the indexes show.

To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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Euro Maintains Declines

Simon Dawson/Bloomberg

Euro notes in 20, 10 and five denominations are seen in this arranged photograph in London, U.K.

Euro notes in 20, 10 and five denominations are seen in this arranged photograph in London, U.K. Photographer: Simon Dawson/Bloomberg

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Feb. 27 (Bloomberg) -- Ebrahim Rahbari, an economist at Citigroup Global Markets Ltd., talks about German lawmakers' vote approving aid for Greece and the outlook for Europe's sovereign debt crisis. He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)