Japanese blowing particularly hard right now:
Yen Drops for Ninth Day in 10 Against Dollar on BOJ Speculation
Sept. 17 (Bloomberg) -- The yen fell for a ninth day in 10 against the dollar in New York trading on speculation Japan will sell its currency to weaken it, trying to prevent a 2.7 percent rally in the past month from curbing exports.
The government is ''closely watching the foreign-exchange market's direction'' and ''will take action as needed,'' Zembei Mizoguchi, vice finance minister for international affairs, said today. The yen had its biggest gain in more than a month against the dollar and in more than two years against the euro yesterday after the Bank of Japan said it's more optimistic about growth.
''The threat of government yen sales is still quite relevant,'' said Michael Malpede, senior foreign-exchange analyst in Chicago at Refco Group Ltd., the biggest U.S. non-bank futures brokerage. ''It makes it difficult for the yen to rise on its own accord.''
The yen fell to 116.35 per dollar at 8:56 a.m. in New York from 116.19 yesterday, and to 130.46 per euro from 129.87. The Japanese currency declined against all 16 major currencies tracked by Bloomberg.
The Bank of Japan sold yen earlier this month, when the currency rose to a three-month high of 115.81 per dollar, traders and analysts who deal with the central bank said. The central bank spent a record 9.03 trillion yen ($77 billion) from January through July to keep the currency from rising.
''The bank has as yet not officially said that it intervened, but it is clear that it was in'' the market selling the currency today, said Dennis Gartman, an economist and editor of the Gartman Letter. The Bank of Japan may have sold as much as $20 billion, he said.
Japanese Growth
Japan's currency is benefiting as the economy recorded its fastest expansion in 2 1/2 years in the second quarter, prompting some investors to buy Japanese equities. The outlook for exports, which account for about 10 percent of Japan's economy, is improving, the central bank said in its monthly report yesterday.
Japan's Topix stock index reached a 15-month high yesterday, and has gained 14 percent in the past two months, as Japan recovers from its third recession since 1991 with growth of 1 percent in the second quarter. The Nikkei 225 Stock Average has risen 15 percent in the same period.
The dollar fell to $1.1212 per euro from $1.1177, and had its biggest one-day decline against the British pound in more than three months, to $1.6008 per pound. The pound rose against 15 of 16 major currencies tracked by Bloomberg today and is up 1.6 percent against the dollar this month.
Higher interest rates in the United Kingdom and in the 12 nations sharing the euro favor investments in that region. The U.K. central bank said policy makers led by Governor Mervyn King voted unanimously this month to keep their benchmark lending rate unchanged at 3.5 percent, the lowest since 1955. The European Central Bank's benchmark lending rate is 2 percent, and the U.S. rate is at 1 percent.
Housing Starts
''The investment community is going between growth and yield,'' said Refco's Malpede. ''The U.K. presents both.''
The Federal Reserve yesterday left its benchmark rate at 1 percent to help spur growth in the world's biggest economy. The number of people applying for unemployment insurance rose to a two-month high last week, government figures showed.
''Sentiment will still be fragile on the dollar,'' said Aziz McMahon, a London-based currency analyst at ABN Amro Holding NV, the biggest Dutch bank. McMahon said the dollar may weaken to as low as $1.15 per euro in coming weeks.
A report today showed U.S. housing starts in August stayed close to a 17-year high. Builders started work on 1.820 million homes at an annual rate last month, down 3.8 percent from the revised 1.892 million started in July, the Commerce Department said in Washington. Building permits, an indicator of future production, rose 4.8 percent to 1.886 million, the highest this year.
The U.S. needs to attract about $1.52 billion a day to fund its current-account deficit, which held at a record $138.7 billion in the second quarter. The shortfall equals 5.1 percent of gross domestic product. |
