Yen Weakens Versus Peers on Foreign-Investment Bets; Kiwi ClimbsJoseph Ciolli
The yen dropped against the majority of its 16 most-traded counterparts on bets the Japanese currency will weaken further amid signs the nation’s investors are seeking foreign assets.
Japan’s currency erased losses against the dollar after U.S. durable-goods orders fell more than forecast. Meiji Yasuda Life Insurance Co. joined Nippon Life Insurance Co. in saying it may boost overseas investment as it seeks higher returns. The yen has lost 6.5 percent since April 3, the day before the Bank of Japan announced new stimulus. New Zealand’s currency strengthened against all of its 16 most-traded peers.
“The historic policy easing we’ve seen from the Bank of Japan triggered an expected flight out of the yen and into higher-yielding assets,” Omer Esiner, chief market analyst in Washington at the currency brokerage Commonwealth Foreign Exchange Inc., said in a telephone interview. “The next shoe to drop will be if real-money accounts start searching for higher yields and join the flight out of the yen.”
The yen declined 0.2 percent to 129.50 per euro at 5 p.m. in New York after gaining 0.5 percent during the previous two days. The Japanese currency traded little changed at 99.51 per dollar after weakening 0.3 percent earlier to 99.76 and gaining as much as 0.3 percent. It touched a four-year low of 99.95 on April 11.
The euro rose 0.2 percent to $1.3015 after dropping 0.3 percent earlier to $1.2955, the lowest level since April 5.
New Zealand’s dollar, nicknamed the kiwi, climbed as the nation’s central bank said it’s concerned about rising home prices after keeping borrowing costs unchanged today. The kiwi appreciated 0.9 percent to 84.76 U.S. cents and strengthened 1 percent to 84.34 yen.
“Growth in the New Zealand economy has picked up,” Reserve Bank Governor Graeme Wheeler said in a statement in Wellington after leaving the official cash rate at a record-low 2.5 percent. “The bank does not want to see financial or price stability compromised by housing demand getting too far ahead of supply.”
The Swedish krona gained versus most major peers as Riksbank First Deputy Governor Kerstin af Jochnick said the central bank is watching the currency and predicts its recent gains are coming to an end. The krona climbed as much as 0.7 percent, the most since April 2, to 8.5775 per euro, before trading at 8.6145, up 0.3 percent. The krona has soared 27 percent against the shared currency since the end of 2008. It appreciated 0.5 percent today against the dollar to 6.6188.
South Africa’s rand strengthened 0.8 percent to 9.1341 per dollar and added 0.6 percent to 11.8887 per euro as metal prices gained on speculation central banks will take more steps to spur economic growth. Spot gold rose 1.3 percent to $1,432 an ounce.
The Swiss franc slid for a seventh day versus Europe’s shared currency after Italy’s president selected a new prime minister, boosting optimism the nation’s political deadlock will be resolved. The franc fell 0.3 percent to 1.2326 per euro and touched 1.2342, the weakest level since March 14. It declined 0.2 percent to 94.70 centimes per dollar.
The euro fell against higher-yielding peers after UBS AG, Rabobank International and Royal Bank of Scotland Group Plc said they’re forecasting the European Central Bank will cut its key rate by a quarter-percentage point next month.
ECB Vice President Vitor Constancio said policy makers, who meet on May 2, are ready to provide more stimulus if data keep suggesting the euro-area economy is struggling to emerge from recession. He spoke to lawmakers in Brussels at a hearing.
“If the ECB and officials continue to talk about measures that can be taken to offer additional support, that could result in a weaker euro,” Eric Viloria, a senior currency strategist at Gain Capital Group LLC in New York, said in a telephone interview. “Expectations for a rate cut from the ECB are building.”
The yen reversed losses earlier against the dollar after Commerce Department data showed bookings for U.S. goods meant to last at least three years slid 5.7 percent in March, the most in seven months. Orders excluding transportation equipment, which are volatile, unexpectedly fell for a second month.
“We got this dismal durable-goods number, which is putting a little bit of pressure on risk,” Fabian Eliasson, vice president of corporate foreign-exchange sales at Mizuho Financial Group Inc. in New York, said in a telephone interview.
The yen weakened against the dollar after Meiji Yasuda Life said in an outline of its investment plan for fiscal 2013 that it will increase foreign-debt investments. Nippon Life and Sumitomo Life Insurance Co. have also said they may buy more foreign debt if yields in Japan stay low.
The Japanese currency may slide to 110 per dollar in the next six months after it breaches the 100 level for the first time in four years, Macquarie Bank Ltd.’s David Forrester said. Forrester, senior vice-president for Group of 10 foreign-exchange strategy at Macquarie in Singapore, spoke in an interview on Bloomberg TV’s “First Up” with John Dawson.
The median forecast in a Bloomberg survey of economists said the yen will trade at 100 by year-end, with a high estimate of 115. There’s a 23 percent probability the currency will weaken to 110 per dollar by late October, according to options data compiled by Bloomberg.
The yen has been the biggest loser this year against nine developed-nation peers monitored by Bloomberg Correlation-Weighted Indexes, tumbling 11 percent. The dollar has risen 3.5 percent, and the euro has gained 1.9 percent.