Kuroda Breathes Easier After Yen Pares This Year's Gain to 10%

  • No plan to bring up currencies, intervention at G-20: Kuroda
  • Kiwi dollar, Korean won lead gains after China reports data

Yen Set For A Shaky Week As Negative Rates Take Hold

The yen headed for a weekly decline, falling from near levels that some analysts have said may spark market intervention and lead to additional policy easing.

Bank of Japan Governor Haruhiko Kuroda said on Thursday in Washington that he had no plan to bring up foreign-exchange markets or currency intervention at a Group-of-20 meeting because those issues are under the purview of Japan’s Ministry of Finance. A gauge of the dollar pared gains after Chinese industrial production beat analyst estimates, boosting demand for currencies linked to the Asian economy’s growth. The New Zealand dollar and South Korean won led gains among 16 major currencies.

“With the yen undervaluation largely corrected following the recent rally and given implicit endorsement of further Bank of Japan’s easing at the G-20 meeting, I would think the upside of the yen will be limited in the near term,” said Valentin Marinov, head of G-10 foreign-exchange strategy at Credit Agricole SA’s unit of corporate and investment-banking unit in London.

The yen strengthened 0.2 percent to 109.13 per dollar as of 10:50 a.m. in London, paring this week’s decline to 1 percent and leaving this year’s advance at about 10 percent. It gained 0.3 percent to 122.91 per euro. The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major currencies, was little changed Friday.

G-20 Meeting

The yen’s advance to a 17-month high of 107.63 per dollar on April 11 prompted officials including Finance Minister Taro Aso and Chief Cabinet Secretary Yoshihide Suga to say that the government is ready to take action to halt gains if necessary. At the G-20 meeting in Washington, Aso and U.S. Treasury Secretary Jacob J. Lew agreed on the importance of countries honoring exchange-rate commitments, according to a statement.

The G-20 said in February that members will “refrain from competitive devaluations and we will not target our exchange rates for competitive purposes.”

Recent strength in the yen is undercutting the competitiveness of Japanese exporters and hampering Kuroda’s efforts to attain a 2 percent inflation target. Some economists have said the BOJ governor will have to expand his easing program at an April 27-28 meeting and the central bank is likely to cut its outlook for prices and growth. Estimates for when authorities may intervene to sell the yen ranged from 95 to 110 in a survey of 14 analysts this month.

Kiwi, Aussie

The kiwi and Australian dollar climbed along with the won after reports showed China’s economy stabilized last quarter as the property sector rebounded, markets steadied, and loose monetary policy helped spur an improvement in factory conditions. 

“With China data coming out better, the market has a better risk appetite," said Andy Ji, a Singapore-based foreign-exchange strategist and economist at Commonwealth Bank of Australia. “There’s a tendency for the yen to weaken. The yen has strengthened to some extent by safe-haven demand. Aussie and New Zealand dollars will be very well supported."

New Zealand’s dollar gained 1 percent to 69.14 U.S. cents, while Australia’s currency climbed 0.4 percent to 77.25 U.S. cents. The won advanced 0.9 percent to close in Seoul at 1,146.18 against the greenback.

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