Yen Drops Toward 100 per Dollar as Kuroda Hails G-20

The yen slid toward the 100 per dollar level not seen for four years, extending its longest streak of monthly losses in more than a decade, as the Bank of Japan’s stimulus policies weren’t opposed by the Group of 20.

Japan’s currency dropped against most of its 16 major counterparts after BOJ Governor Haruhiko Kuroda emerged from the talks saying he was emboldened to press ahead with the campaign to defeat deflation. The central bank meets this week after pledging April 4 to double the monetary base in two years. Europe’s 17-nation currency halted last week’s decline against the greenback before Giorgio Napolitano is sworn in to a second term as Italian president.

“There’s nothing really in our view to stop the yen from continuing to weaken here,” said Ray Attrill, Sydney based global co-head of currency strategy at National Australia Bank Ltd. “We are having a little bit of tug-of-war, I think, up close to 100. I’ve no doubt we’ll go through it at some point.”

Japan’s currency fell to 99.90 per dollar, the weakest level since April 11, before trading at 99.87 as of 10:47 a.m. in Tokyo, from 99.52 in New York on April 19. It was quoted at 99.98 at 3:22 a.m. Tokyo time, a level that hasn’t been seen since April 14, 2009.

The yen has fallen 5.7 percent since the end of March, when it completed a sixth-straight monthly drop in its longest losing stretch since 2001.

The yen dropped 0.6 percent to 130.63 per euro. Against Australia’s dollar, it fell 0.6 percent to 102.92 yen. The euro advanced 0.2 percent to $1.3081, after declining 0.5 percent last week.

Short Positions

“Winning international understanding gives me more confidence to conduct monetary policy appropriately,” Kuroda told reporters after the G-20 meeting. “We will continue our qualitative and quantitative easing for the next two years.”

The BOJ is scheduled to deliver its next policy statement on April 26.

Futures traders increased bets that the yen will decline against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed last week. The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- so-called net shorts -- was 93,411 on April 16, compared with net shorts of 77,697 a week earlier.

“The 2009 high comes in near 101.45 yen and is the next immediate target,” Marc Chandler, the New York-based global head of currency strategy at Brown Brothers Harriman & Co., wrote in an e-mailed note to clients. “That said, a failure to break the 100 yen level convincingly, while Japanese investors continue to sell foreign bonds, would hit the bearish yen psychology.”

Selling Bonds

Japanese investors were net sellers of foreign bonds during the week ended April 12 according to figures based on reports from designated major investors released by the Ministry of Finance last week. Japanese investors sold 331.9 billion yen ($3.3 billion) in overseas bonds and notes, the data showed.

The yen has dropped 5.6 percent in the past month, the worst performer among 10 developed nation currencies tracked by Bloomberg Correlation Weighted Indexes. The euro has risen 1 percent and the dollar has gained 0.4 percent.

In Italy, Napolitano could begin consultations on a new government as soon as tomorrow. The resignation of Democratic Party leader Pier Luigi Bersani increases the chances that Napolitano can convince the remnants of Bersani’s Democrats to join a coalition with Silvio Berlusconi’s People of Liberty party and end a stalemate that’s left Italy without a new government eight weeks after elections.

“As long as we can avoid the inevitability of elections, this weekend’s development is positive in that regard, then, that provides a little bit of support under the euro,” said Attrill at NAB.

(Corrects yen low as data for currency trading corrected.)
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