The yen for a second day reached the weakest level in four years, when it last traded at 100 per dollar, as traders speculated Bank of Japan (8301) stimulus measures will keep driving investors into higher-yielding currencies.
The Japanese currency traded within 0.2 percent of the 100- yen level yesterday and within 0.1 percent today. The dollar slid against most major peers as investors bet that central banks around the world will maintain stimulus measures. The New Zealand dollar climbed to the highest level since August 2011, and the euro reached a six-week high against the greenback.
“The trend for weaker yen should continue, and in that sense I don’t think it’s surprising that people are still willing to sell the yen on strength,” Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in a phone interview. “We’ve been seeing some flow” that may be driving the yen weaker.
The yen rose 0.1 percent to 99.68 per dollar at 5 p.m. in New York after gaining 0.7 percent earlier following data that showed Japanese investors sold foreign bonds last week. The currency declined as much as 0.2 percent to 99.95, the weakest since April 14, 2009. The dollar fell 0.2 percent to $1.3099 per euro and reached $1.3138, the weakest since Feb. 28. The 17- nation common currency rose 0.1 percent to 130.58 yen.
The Dollar Index (DXY), which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trade partners, touched 82.068, the lowest level since March 15, before trading at 82.257, down 0.3 percent.
The New Zealand dollar gained for an eighth day against the greenback, touching 86 U.S. cents for the first time in 1 1/2 years after reports showed the nation’s manufacturing expanded last month and a gauge of home prices advanced. The currency, nicknamed the kiwi, climbed as much as 1.2 percent to 86.76 cents, the highest since August 2011, before trading at 86.34, up 0.7 percent.
The currency of Canada, another exporter of commodities, reached a seven-week high. The Canadian dollar gained 0.4 percent to C$1.0105 to the greenback and touched C$1.0084, the strongest since Feb. 18.
“You can see your winners today are ones that normally benefit” from central bank easing, Fabian Eliasson, vice president of corporate foreign-exchange sales at Mizuho Financial Group Inc. (8411) in New York, said in a telephone interview. “Are they going more into higher yield? Yes. Is it because of an overall change in macro perspective? I’m not so sure.”
Sweden’s currency strengthened versus the euro and dollar after a report showed consumer prices were unchanged on an annualized basis in March, above the median of 12 estimates in a Bloomberg survey. The krona gained 0.4 percent to 8.3223 per euro and climbed 0.7 percent to 6.3539 per dollar.
Colombia’s peso fell to a one-week low on speculation the government will announce measures next week that will lead to further declines in the currency. President Juan Manuel Santos will present a stimulus plan April 15 that includes additional measures to stem gains in the peso, Finance Minister Mauricio Cardenas said last week. The currency ended the day down 0.2 percent to 1,823.70 to the dollar after touching 1,827.30.
The yen has lost 13 percent this year versus nine developed-nation counterparts monitored by Bloomberg Correlation-Weighted Indexes. The euro has gained 0.9 percent, and the dollar has advanced 1.6 percent.
Japanese investors were net sellers of foreign debt in the week ended April 5, according to data released by the Ministry of Finance today. They offloaded 1.14 trillion yen ($11.5 billion) in overseas bonds and notes, purchased 6.3 billion yen in overseas stocks and bought 75.5 billion yen in overseas short-term securities.
Haruhiko Kuroda said yesterday the unprecedented stimulus announced on April 4 after his first meeting as BOJ governor is enough to achieve a 2 percent inflation goal. The bank is boosting monthly bond buying to 7.5 trillion yen ($80 billion), suspending a cap on some bond holdings and dropping a limit on debt maturities.
The central bank has taken all “necessary” and “possible” measures, Kuroda told reporters in Tokyo. While officials will change policy as needed, he doesn’t expect adjustments each month, he said. The BOJ chief reiterated a pledge to do what’s needed to meet a 2 percent inflation target in two years.
Europe’s shared currency strengthened as Italy sold 4 billion euros of new 2.25 percent 2016 notes at 2.29 percent, down from the 2.48 percent on similar-maturity debt allotted on March 13, as investors shrugged off risks tied to the nation’s political crisis.
“The euro has been cheap versus the dollar,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “Our analysis shows it has been undervalued, relative to what has been going on in Italian and Spanish bond markets.”
BNP Paribas forecasts the euro will rise to $1.35 within three months, Sneyd said.
The International Monetary Fund said in a report today that global central banks buying assets and keeping interest rates low to boost growth have had “positive short-term effects for banks” even as risks from the policies are increasing.
Central banks in the U.S., Europe, Japan and the U.K. attacked the longest and deepest financial slump since the 1930s with unorthodox accommodation.
The Fed spent $2.3 trillion from 2008 to 2011 in two rounds of bond purchases to spur economic growth. It’s now buying $85 billion of debt a month. The Fed has kept its benchmark interest rate at zero to 0.25 percent since 2008 to support the economy.
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