Yen Weakens Versus Dollar Amid Wagers G-20 Won’t Criticize Japan

The yen fell versus the dollar the first time in four days after a Group of 20 official said there isn’t a plan for a statement by the nations to echo a Group of Seven pledge to avoid using exchange rates as policy targets.

The Japanese currency, which has lost 7.2 percent this year versus the dollar as Japan seeks to spur growth, declined for the week amid bets G-20 finance chiefs won’t publicly criticize the Asian nation. The latest draft of a statement to be released tomorrow will urge members to avoid competitive devaluations and let exchange rates be set by markets, said the official, who sought anonymity because the document isn’t public.

“The statement is basically in line with what people have been expecting, with not singling out Japan and letting the market determine the exchange rate,” Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in a telephone interview. “People are still looking for a weaker yen.”

Japan’s currency depreciated 0.7 percent to 93.50 per dollar at 5 p.m. New York time after gaining as much as 0.7 percent earlier. It lost 0.9 percent this week. The yen fell 0.7 percent to 124.96 per euro after gaining to 122.90, the strongest since Jan. 30.

Europe’s 17-nation currency traded little changed at $1.3360, after sliding earlier to $1.3306, the lowest since Jan. 24. The euro was little changed on the week.

G-20 finance ministers and central bankers at a two-day meeting that began today in Moscow will reaffirm a pledge to “refrain from competitive devaluation” and commit to monitoring “possible monetary-policy spillover,” according to a Feb. 11 draft obtained by Bloomberg.

Swedish Krona

Sweden’s krona fell for a second day against the dollar after central-bank Governor Stefan Ingves said Feb. 13 the currency’s appreciation has brought it to an appropriate level and the exchange rate will probably remain where it is.

The krona weakened 0.2 percent to 6.3222 per dollar and fell 0.2 percent to 8.4477 per euro. It has climbed 6.4 percent over the past 12 months against the U.S. currency and was up 2 percent this week.

The Riksbank’s interest-rate policy is “unfortunate” for the nation’s exporters and employment, as it’s encouraging a strong krona, Sverker Martin-Loef, chairman of Swedish companies including SSAB AB and Industrivaerden AB, said in an interview with the Swedish financial newspaper Dagens Industri.

Norway’s Krone

The Norwegian krone touched a three-week low against the greenback after Norges Bank Governor Oeystein Olsen said policy makers are ready to cut interest rates further to counter gains in the currency that interfere with the inflation target. The currency depreciated as much as 0.6 percent to 5.5673 per dollar, its weakest level since Jan. 24, before trading at 5.5435, down 0.1 percent.

Canada’s dollar fell for the first time in four days against its U.S. counterpart after a report showed the nation’s manufacturing sales dropped in December more than forecast. It weakened 0.6 percent to C$1.0064 to the greenback.

New Zealand’s dollar dropped as commodities fell, with Standard & Poor’s GSCI Index down 0.4 percent in its first decline in four days. The currency, nicknamed the kiwi, sank 0.7 percent to 84.51 U.S. cents.

The yen tumbled 16 percent over the past three months, the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar declined 1.3 percent and the euro rose 3.7 percent.

Reignited Tensions

G-20 finance ministers and central bankers are meeting at the end of a week in which rich economies sought to avert a currency war by vowing not to make exchange rates a goal of policy. Group of Seven officials then reignited tensions by dividing over whether their first joint comment on currencies since 2011 was an attempt to slow the yen’s fall.

Russian Deputy Finance Minister Sergei Storchak said today that the G-20 communique won’t include the words “currency war,” and Russia won’t issue a separate statement on Japan.

“The lack of direct reference to foreign-exchange targeting would cause investors to interpret that as the G-20 saying they don’t mind where the yen has gone so far,” Charles St-Arnaud, a currency strategist in New York at Nomura Holdings Inc., said in a telephone interview. “It’s kind of like giving a seal approval to what’s happening in Japan.”

The premium for one-month options granting the right to sell the yen versus the dollar relative to those allowing for purchases touched 0.205 percentage point today, the least since Oct. 31, according to data compiled by Bloomberg. The risk- reversal rate reached a 1.068 percentage-point premium for yen puts on Feb. 6. A put option gives the right, but not the obligation, to sell a currency.

BOJ Governor

Prime Minister Shinzo Abe is close to choosing his nominee for the top Bank of Japan post, and the decision may come in a few days, Reuters reported. BOJ Governor Masaaki Shirakawa, criticized by politicians for not doing enough to end deflation, said last week he’ll step down on March 19, about three weeks before his five-year term is due to end.

The euro fell yesterday after reports signaled that the 17- nation currency bloc’s recession deepened more than forecast last quarter. Gross domestic product fell 0.6 percent in the fourth quarter from the previous three months, the European Union’s statistics office said, the worst performance since the first quarter of 2009.

European Central Bank Governing Council member Jens Weidmann said today a rising euro alone won’t trigger interest- rate cuts.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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