Yen Weakens After Reports Signal Japan's Economic Expansion May Be Slowing
Yen Weakens as Reports Signal Japan's Expansion May Be Slowing
Jan. 28 (Bloomberg) -- The yen fell from its strongest in more than a week versus the dollar in Asia after government reports showed Japanese industrial production and household spending in December declined.
The currency has fallen 1.2 percent since reaching a five- year high of 101.69 per dollar on Jan. 17 on concerns growth is slowing in the world's second-largest economy. The yen earlier rose after Dow Jones Newswires reported a Chinese central bank adviser said ``now is the time'' for China to revalue the yuan.
``There is no doubt the Japanese economy has lost momentum,'' said Harvinder Kalirai, chief market analyst in Sydney at State Street Corp., the world's largest custodian of assets with more than $1.2 trillion under management. ``That loss of momentum should be negative for the yen.''
The yen fell to 102.97 per dollar at 10:09 a.m. in Tokyo, from 102.71 late yesterday in New York, according to electronic currency trading system EBS. It earlier rose as high as 102.37. The currency traded at 134.25 per euro, from 133.95. The yen may fall to 105 against the dollar in the next few weeks, Kalirai said.
``Now is the time to revalue'' the yuan, People's Bank of China adviser Yu Yongding told journalists at the World Economic Forum in Davos, Switzerland, according to Dow Jones. The yen on Jan. 26 rebounded from a two-week low after a Chinese official said Finance Minister Jin Renqing will discuss the yuan's fixed exchange rate at next week's Group of Seven meeting.
`Running High'
``Speculation ahead of the G-7 meeting is running high over when and what China will do,'' Kalirai said. ``The implications are significant, since all Asian currencies would appreciate if China revalues, including the Japanese yen.''
Japan's production last month fell 1.2 percent, in line with the median forecast of 38 economists surveyed by Bloomberg News. Spending by households headed by a salaried worker declined 3.8 percent from November, seasonally adjusted. The jobless rate was 4.4 percent, below the 4.5 percent forecast in a Bloomberg survey and the 4.5 percent in November.
The economy grew an annualized 0.2 percent in the three months to Sept. 30, barely avoiding a second quarter of contraction. Exports in December rose the slowest in a year as demand cooled in the U.S. and China.
Japanese stocks fell, with the Nikkei 225 Stock Average declining as much 0.4 percent, headed for a seventh losing session in nine.
``The story is still bad for Japan,'' said Craig Ferguson, a currency strategist in Melbourne at Australia and New Zealand Banking Group Ltd. ``The economy has almost fallen off a cliff the last two quarters. The yen is certainly going to weaken.''
U.S. GDP
The dollar may also rise against the euro on speculation a government report today will show the U.S. economy last year expanded the fastest since 1999. A government report yesterday showed a gauge of durable-goods orders, excluding transportation equipment, rose more than forecast.
The government will probably report today that GDP rose 3.5 percent in the final three months of 2004, bringing growth for the year to 4.4 percent, based on the median forecast of 83 economists surveyed by Bloomberg News. The economy is expected to grow 3.6 percent this year, according to the median estimate of 69 economists Bloomberg surveyed from Jan. 3 to Jan. 7.
Orders at U.S. factories increased 2.1 percent last month, excluding transportation, after a 0.9 percent drop in November, the Commerce Department said.
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