Yen Erases Gains Against Dollar on Speculation Bank of Japan Selling Yen
By Tom Giles
Yen Falls Against Dollar on Speculation BOJ Sold Yen (Update4)
(Rewrites 1st paragraph.)
London, June 10 (Bloomberg) -- The yen fell against the
dollar on speculation the Bank of Japan intervened to halt
today's rally. The currency erased gains it made earlier on
figures showing a surge in Japanese growth.
''The last thing the authorities want is a strong yen to
undermine the recovery,'' said Keith Edmonds, an economist at IBJ
International. ''It's clear after the sharp appreciation on the
back of the growth figures that official concern against that
jump is being shown.''
The yen fell as low as 119.95 per dollar, down from a high
for the day of 117.57 yen and compared its London closing price
of 119.31 yen. It was recently at 118.92 yen. The euro rose as
high as $1.0524 from $1.0466, on signs European growth is
accelerating and amid hopes for an end to the war in Kosovo.
''An excessive rise in the yen is not desirable for the
Japanese and the global economies,'' said Haruhiko Kuroda,
director general of the Finance Ministry's International Bureau,
though he declined to say whether there was any intervention.
Traders in London and Tokyo said the central bank sold
dollars when the U.S. currency fell below 118 yen. Spokespeople
at the central bank and ministry of finance declined to comment
on the speculation.
''All the aggressive buying was coming out of Tokyo, and
that gives a bit more credence'' to speculation the central bank
was intervening, said Rob Newman, a currency trader at Bank of
Nova Scotia.
Growth Surges
The Japanese currency was bolstered in early trading by a
report showing the economy grew by 1.9 percent in the first
quarter, compared with a drop of 0.8 percent in the previous
quarter and outpacing the 0.1 percent gain anticipated by
economists in a Bloomberg News survey.
Japanese officials, have repeatedly said they don't want the
yen to rise too fast, as that would crimp exports and smother
growth. Finance Minister Kiichi Miyazawa said today that big
shifts in the currency market are ''undesirable,'' though he's
not concerned about specific currency levels. He also said it's
difficult to be too optimistic about the economy, though it's
rebounding faster than expected.
The euro rose against the dollar as North Atlantic Treaty
forces prepared to halt an 11-week bombing offensive. Yugoslavia
pledged to pull its 40,000 troops out of Kosovo within 11 days,
making way for a NATO-led international security force to begin
escorting more than 1 million ethnic Albanian refugees back home.
NATO said Serb troops began moving north out of Kosovo today.
''This is positive for the euro because it removes an
element of underlying weakness, just when the euro is being
propelled by signs of strong growth in Europe,'' said Giorgio
Radaelli, head of European market research at First Chicago Bank,
who said the euro could rise to between $1.12 and $1.15 in the
final quarter of the year.
A report today showed industrial production in Germany, the
euro area's largest economy, rose 1 percent in April, after
falling 0.1 percent in March. That beat the 0.3 percent output
increase forecast by economists in a Bloomberg poll.
Germany's unemployment rate fell to 10.5 percent in May from
10.6 percent in April, the Bundesbank reported today, although it
attributed the decline to a change in the definition of an
unemployed person and in the base year. The government's
unemployment rate, which isn't adjusted for seasonal swings, fell
to 10.2 from 10.7 percent in April.
Further evidence of recovery in Germany could lift the euro
in the coming weeks, traders said. |
