Yen Rises After Aso Rules Out Japan’s Foreign-Debt Buying

The yen strengthened for the first time in three days against the dollar and euro as Japanese finance minister Taro Aso said the government doesn’t intend to buy foreign bonds to end deflation by weakening the currency.

The yen rose from almost the weakest since May 2010 versus the U.S. currency as Aso’s comments countered those of Prime Minister Shinzo Abe, who said yesterday purchasing overseas bonds “exists as one idea.” South Africa’s rand gained even as clashes between labor unions at a mine spurred concern of a repeat of violence that curbed production last year. Australia’s dollar strengthened as the central bank said an improved global outlook boosted commodity prices.

“Japan’s prime minister and the finance chief appear to somewhat be at odds over the future course for policy,” Joe Manimbo, a market analyst at Western Union Business Solutions, a unit of Western Union Co., said by telephone from Washington. “That uncertainty is helping slow the yen’s recent descent.”

The yen gained 0.4 percent to 93.58 per dollar at 5 p.m. in New York after sliding to 94.46 on Feb. 11, the weakest level since May 5, 2010. Japan’s currency advanced 0.2 percent to 125.27 per euro. The euro gained 0.3 percent to $1.3388.

Peso, Rand

Chile’s peso weakened for a fourth day, the longest losing streak in three months, as prices fell for copper, the country’s principal export. The peso depreciated as much as 0.2 percent to 472.90 per U.S. dollar, the weakest since Feb. 12.

The rand gained against most of its 16 major counterparts as clashes between labor groups at Anglo American Platinum Ltd.’s Siphumelele mine in South Africa disrupted operations and caused one serious injury. Twelve workers were shot with rubber bullets and three security guards were hurt in the fighting at the mine in Rustenburg yesterday.

The rand added 0.4 percent to 8.8525 per dollar after sliding 0.4 percent yesterday.

The Aussie gained for a second day versus the U.S. currency after minutes of the Reserve Bank of Australia’s Feb. 5 meeting published today said prices of many metals, coal and crude oil, have benefited from the better global outlook.

Governor Glenn Stevens and his board, who kept the benchmark rate unchanged this month, said the local currency’s strength doesn’t reflect the significant decline in the nation’s terms of trade.

The Australian dollar appreciated 0.5 percent to $1.0356 and rose against all of its major counterparts except the yen and Swedish krona.

End Deflation

Japanese officials have toned down calls for a weaker yen to help exporters after trade partners complained the nation risked setting off a currency war. Since Abe called for unlimited money printing by the central bank when he was opposition leader on Nov. 15, the yen has slid 13 percent against the dollar, the biggest drop among the major currencies.

In last year’s election campaign, Abe’s Liberal Democratic Party proposed a joint fund operated by the BOJ, the Ministry of Finance and private investors that would buy foreign bonds as a means to end deflation and curb yen strength. The debt fund “exists as an idea,” Abe told parliament yesterday.

“We don’t intend to buy foreign bonds,” Aso said to reporters today in Tokyo, adding the government isn’t considering any immediate change to the law governing the BOJ. Aso later said that the yen’s unexpected decline had been a result of policies.

‘Further Easing’

“The dollar-yen is under pressure,” Sireen Harajli, a foreign-exchange strategist in New York at Credit Agricole SA, said of Aso’s interview with reporters. “We think that a lot has already been priced in in dollar-yen. We see it struggling to move above the 94 level -- the price already reflects a lot of policy expectations at this point.”

The yen has slumped 15 percent in the past three months, the worst performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar dropped 1 percent and the euro gained 3.9 percent.

Group of 20 finance ministers and central-bank governors said in a statement after Feb. 15-16 meetings in Moscow that monetary policy should be directed at domestic price stability and nations will refrain from “competitive devaluation.”

Minutes of the BOJ’s Jan. 21-22 meeting released today showed a few members said extending the maturity of bond purchases to five years is an option. The central bank doubled its inflation target to 2 percent at the gathering and pledged open-ended asset purchases to begin next year.

To contact the reporters on this story: Neal Armstrong in London at narmstrong8@bloomberg.net; John Detrixhe in New York at jdetrixhe1@bloomberg.net

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

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