Global Currencies: Yen Nears 44-Month High vs Dollar
Tokyo, Nov. 1 (Bloomberg) -- The following is a summary of world foreign-exchange markets.
ASIA-PACIFIC
The YEN traded near a 44-month high against the dollar and a one-month high against the euro, on expectations investors will channel more funds into Japanese stocks, boosting demand for yen to buy shares.
Economic indicators released in Japan on Friday, including an unexpected decline in September's jobless rate, pointed to continued recovery. Extra government spending plans and prospects for third-quarter economic growth also made investors optimistic.
''Everything -- foreigners' buying Japanese stocks, Japan's additional economy-boosting steps and hope for rising gross domestic product (for the July-September quarter) due in December suggest the current strong-yen trend won't change soon,'' said Takeshi Hanai, head of foreign exchange at Industrial Bank of Japan Ltd., who expects the dollar to be as low as 102 this week.
The yen rose as high as 103.72 to the dollar and recently traded at 104.08, little changed from 104.10 in late New York trading Friday. That's near the 103.20 it reached on Sept. 15, its strongest since Jan. 2, 1996. The euro fell to 109.74 yen from 109.89 in New York, where it reached a one-month low of 108.95.
The AUSTRALIAN DOLLAR fell to a two-month low against the U.S. dollar as gold declined and after a report showed that Australia's trade deficit widened more than expected to a record in September.
The report shows ''we still have a clear current account deficit which is one thing offshore markets hate,'' said Glen Bull, strategist at Standard and Poor's MMS International.
Large trade and current account deficits can undermine a country's currency as its creditworthiness falls.
The Australian dollar, or Aussie, fell to 63.68 U.S. cents from 64.45 cents yesterday. Earlier, it fell as low as 63.55, its lowest level in two months.
The NEW ZEALAND DOLLAR fell to 50.80 U.S. cents from 51.22 U.S. cents in late trading Friday.
''It really is being driven by movements in the Australian dollar,'' said Greg Ball, foreign exchange sales manager at Bank of New Zealand Ltd. ''People have been winding back expectations of the size of a rate rise in Australia'' and that's weighed on the currency.
The New Zealand dollar may also gain against the Australian dollar as expectations build the Reserve Bank of New Zealand will raise rates Nov. 17 by as much as 50 basis points, a bigger increase than is likely by Australia's central bank.
The New Zealand dollar rose to 79.43 Australian cents from 79.15 cents in late trading Friday.
The INDONESIAN RUPIAH gained 2.7 percent to 6,740, to build on its 18.6 percent gain in October when it was the world's best performing currency against the U.S. dollar. The Singapore dollar rose 0.4 percent to 1.6588, the Thai baht rose 0.3 percent to 38.56, and the Philippine peso slipped 0.2 percent at 40.20.
The SOUTH KOREAN WON gained 0.3 percent to 1,196.3, while the NEW TAIWAN DOLLAR rose 0.05 percent at 31.72. The HONG KONG DOLLAR 12-month forward rate, or the level at which investors expect the currency to be at in a year, was up at 7.8307 from 7.8341 -- as fears of an interest-rate increase abated -- the Hong Kong dollar is pegged to the U.S currency.
The MALAYSIAN RINGGIT remains pegged at 3.80, and the CHINESE RENMINBI is pegged at 8.27 to the dollar.
North America
The YEN rose against the DOLLAR and the EURO for the sixth day in seven, amid expectations investors will channel more funds into Japanese stocks.
The yen rose to 104.12 per dollar -- its strongest since Sept. 23 -- from 105.04 late yesterday. It earlier climbed as high as 103.96. The yen also gained against the euro, to 109.840 per euro from 110.495 yesterday.
Against the euro, the dollar fell to $1.0547 per euro from $1.0511 yesterday in New York trading.
Japan's jobless rate unexpectedly fell in September, a government report showed. That, and strength in housing starts and vehicle exports, fed optimism on the economy. (Story illustration: JPY <Crncy> GIP for a graph of the dollar's intraday performance against the yen; EUR <Crncy> GIP for a graph of the euro's performance against the dollar; JYEU <Crncy> GIP for the yen against the euro.)
The CANADIAN DOLLAR was little changed after U.S. reports showing slower growth and inflation eased concern that the Federal Reserve will need to aggressively raise interest rates in coming months.
The Canadian dollar rose to 67.98 U.S. cents, or C$1.471 per U.S. dollar, from 67.91 U.S. cents, or C$1.473 per U.S. dollar, yesterday.
Latin America
The MEXICAN PESO strengthened after investors interpreted comments by Federal Reserve Chairman Alan Greenspan to mean the central bank may not have to raise interest rates aggressively to stem inflation.
The currency rose to 9.64 pesos to the U.S. dollar from 9.65 pesos yesterday. One peso is worth 10.37 U.S. cents.
Following Greenspan's comments, U.S. interest rates fell to their lowest levels in three weeks, making Mexican securities more attractive by comparison. Investors bet U.S. benchmark rates will not have to rise as much as previously expected to slow inflation in a growing economy.
BRAZIL'S REAL strengthened to its highest level in more than two weeks on optimism the central bank has more room to intervene after the reserves minimum in an International Monetary Fund accord was lowered.
The real gained 0.9 percent to 1.955 to the dollar, compared with yesterday's close of 1.9730. It was the currency's highest level against the dollar since Oct. 13.
Brazil's central bank said yesterday that its foreign currency reserves can fall as low as $20.99 billion by the end of November and $20.3 billion by the end of December without the country violating a $41.5 billion bailout agreement with the IMF. That's $2 billion below the old ceiling.
EUROPE
The BRITISH POUND approached a one-month high against the euro after reports showed U.K. house prices rose at their fastest annual pace in 17 months in October, and mortgage lending rose to a record in September.
Both reports reinforced expectations that the Bank of England will raise its benchmark interest rate next week, increasing the attractiveness of short-term pound deposits.
The pound rose, pushing the euro down to 0.6389 pound from 0.6427 pound. The single currency approached the one-month low of 0.6377 pound reached yesterday. The pound was little changed at $1.6363 from yesterday's closing rate of $1.6358, erasing an earlier gain. It's not far from the one month low of $1.6353 reached yesterday.
The SWISS FRANC was little changed near a one-month low against the dollar and could drop further, analysts said, as global investors snap up dollars to buy U.S. assets.
The franc was at 1.5241 per dollar from 1.5245 francs late Thursday. It touched a low of 1.5313 in mid-morning London trading Friday, its weakest since Sept. 27. It was little changed versus the euro, putting the single currency at 1.6029 francs from 1.6039 francs.
Evidence on the pace of growth in Switzerland will come this week with reports on unemployment and retail sales.
The SWEDISH KRONA fell against the euro as the single currency gained on continuing expectations the European Central Bank will raise interest rates next week.
The krona declined to 8.6746 per euro from 8.6696 yesterday After rising to 8.2220 per dollar from 8.2430 yesterday. The euro rose against the dollar to $1.0524 from $1.0515 yesterday.
Higher European interest rates would narrow the interest rate-premium of holding krona- and krone-denominated assets because the two Scandinavian countries typically don't follow European interest rate changes closely.
Nov/01/1999 4:52 |
