U.S. Intervention Doubts Clear Way for Yen Gain as Oil Tumbles

  • U.S. pushed back at Japanese comments, saying moves orderly
  • Japan's currency has climbed 11 percent so far this year

The yen climbed for a second day after oil prices plunged and Japan’s Group-of-20 peers signaled opposition to the nation using market intervention to limit its 11 percent surge this year.

Japan’s currency rose toward its strongest in 17 months after talks in Doha between OPEC members and other oil producers ended without an agreement to limit supplies, sending crude down as much as 6.8 percent. U.S. Treasury Secretary Jack Lew on Friday called foreign-exchange market moves “orderly” -- a signal the U.S. doesn’t view yen-selling intervention as warranted. The rebuff came after Japanese officials warned of one-sided foreign-exchange moves and speculators built record bets on further yen gains.

“It’s mainly the safe-haven element of the yen playing out with a risk-off move -- sell the commodity currencies and buy the yen,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “It’s not obvious whether the G-20 comments should allay fear of intervention down the line. There are conflicting pressures and it’s murky.”

The yen climbed 0.6 percent to 108.14 per dollar as of 8:34 a.m. in London, and advanced against all 16 major counterparts. Japan’s currency has surged more than 11 percent this year, the best performer among 10 developed peers, and reached a 17-month high of 107.63 per dollar on April 11.

Wagers on yen gains by hedge funds and other large speculators exceeded those on declines by 66,190 in the week to April 12, climbing for four straight weeks, according to data from the Commodity Futures Trading Commission in Washington.

G-20 finance chiefs on Friday reiterated a pledge to refrain from weakening their currencies to gain a trade edge over rivals, while stating that “disorderly movements” in exchange rates can be harmful.

International Monetary Fund Managing Director Christine Lagarde on Thursday said that currency intervention was only appropriate to avoid “very disruptive volatility.”

The yen’s surge since a Jan. 29 decision by the Bank of Japan to adopt negative interest rates threatens the profits of exporters and Governor Haruhiko Kuroda’s 2-percent inflation goal.

There’s speculation the central bank will now need to add more stimulus, particularly after a series of earthquakes struck southern Japan. The temblors that hit the island of Kyushu since Thursday represent the nation’s most devastating natural disaster since the huge quake and tsunami in March 2011.

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