Asia FX Review: Yen sentiment undermined by drops in stock prices
Updated Tues 6/12/2001 02:53 EDT
By Yumi Kuramitsu Tokyo, June 12 (BridgeNews) - The Japanese yen ended fairly unchanged against the dollar in Asian trade Tuesday as most of the yen's strength in the morning was erased in the afternoon, undermined by the falls in Japanese share prices, especially the banking index. The yen traded at 121.82 as of 1500 JT against the dollar, compared with the New York closing level of 121.97 and the region's high of 121.55. * * * Asian Close NY Close Previous Asian Close Asian Range (1500 JT) (1500 ET) (1500 JT) (1500 JT) USD/JPY 121.82 121.97 121.23 121.55-122.08 EUR/USD 0.8422 0.8435 0.8503 0.8420-0.8437 EUR/JPY 102.60 102.92 103.17 102.44-102.98 The yen strengthened to 121.55 against the dollar in morning trade as market players sold the greenback to take profit or liquidate their long dollar positions after the U.S. currency failed to rise further above an overnight high of 122.07. "I thought sentiment for the dollar/yen itself would be bullish after the release of (weaker-than-expected Japan's) gross domestic product for January-March. However, the pair's topside has been capped by yen-crosses such as euro/yen and sterling/yen, encouraging players who established long positions on dollar/yen to liquidate their positions today," said Noriyoshi Tsunoda, manager of the International Treasury Division Osaka at Fuji Bank Ltd. However, the yen was sold in the afternoon trade and eased back to near 121.90 against the dollar as the tone of the currency was hurt by concerns about the nation's banking sector with the banking sector index fell 4.65% on the Tokyo Stock Exchange. Japanese shares ended sharply lower Tuesday, broadly battered by renewed concerns over the country's economic weakness as well as nervousness over upcoming pre-announcement season in the United States and following sustained slide on Wall Street overnight. The Nikkei 225 Stock Average dropped 386.38 points, or 2.9% at 12,840.10, ending below the psychologically important 13,000 line for the first time since April 10. The foreign exchange market reacted little to news reports and comments from Japanese officials. The Financial Times reported that Japanese Finance Minister Masajuro Shiokawa said the government will not unveil its detailed economic reform proposals until after parliamentary elections are held in July, although this was no surprise to the market. Shiokawa said Tuesday morning Japan's economic fundamentals are basically sound and he is not too pessimistic about the future direction of the economy. The minister said he would welcome more easing from the Bank of Japan. Shiokawa also said the government aims to achieve a primary budget balance after the economy will becomes stabilized. Ratings agency Standard and Poor's said it is taking a "wait and see" stance on Japanese economic reform. An S&P official said 6-12 months will be needed to judge progress on structural reform. The official added that the clean up of bad loans is key for long term recovery and that Prime Minister Junichiro Koizumi's plans for reform will not affect the sovereign rating right away. The euro spiked down from New York closing levels around 0.8435 against the dollar, before bouncing from 0.8420 to 0.8437. Buying to defend options related triggers at 0.8400 was suspected and there was talk of option related stop-loss orders below this level. Euro sentiment remained bearish after Ireland rejected the Nice Treaty of European integration and the FT lowered its euro-zone growth estimates for the euro-zone. The euro/yen cross rates mostly reflected the movements in dollar/yen, easing to 102.44 on the back of declines in dollar/yen, but rebounding back to around 102.80 as dollar/yen gained ground. End |
