Wednesday, 13 March 2013

Yen Rises as Lack of BOJ Nominee Consensus Tempers Easing Bets

By Masaki Kondo & Anchalee Worrachate - Mar 13, 2013 12:22 PM GMT+0400

The yen strengthened for a second day against the dollar as a lack of unity among Japanese lawmakers for the government’s picks to run the Bank of Japan (8301) damped speculation for accelerated monetary easing.
Japan’s currency rose versus all 16 of its major peers and bullish bets on the yen in the options market climbed to a nine- month high after the largest opposition party said yesterday it would vote against BOJ deputy governor nominee Kikuo Iwata, an advocate of quantitative easing. The yen has still tumbled 9.2 percent against the dollar this year. The Dollar Index fell before the U.S. releases retail-sales data for February.
Yen Rises Before Japan Opposition Announces BOJ Nominee Stance
The yen dropped 13 percent in the past three months amid speculation a new Bank of Japan leadership will boost cash infusions to end deflation. Photographer: Yuriko Nakao/Bloomberg
March 13 (Bloomberg) -- Mansoor Mohi-uddin, the head of currency strategy at UBS AG in Singapore, talks about the outlook for global currencies including the yen and Bank of Japan monetary policy. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)
March 13 (Bloomberg) -- John Woods, Hong Kong-based chief investment strategist for Asia Pacific at Citigroup Inc.’s private bank, talks about Bank of Japan monetary policy, the yen and stock market. He speaks with Susan Li and Rishaad Salamat on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
March 12 (Bloomberg) -- Tai Hui, Hong Kong-based chief market strategist for Asia at JPMorgan Asset Management, talks about Japan stocks, central bank monetary policy and the yen. He also discusses U.S. stocks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)
News on Iwata “has helped knock down dollar-yen,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “It has gone way beyond what you can justify in terms of relative economic fundamentals and prospective action by the central bank.”
The yen rose 0.5 percent to 95.57 per dollar at 8:02 a.m. inLondon after gaining 0.2 percent yesterday. Japan’s currency strengthened 0.4 percent to 124.75 per euro. The dollar weakened 0.2 percent to $1.3054 per euro.
The Your Party said today it will oppose Haruhiko Kuroda’s nomination for BOJ governor and Hiroshi Nakaso for deputy, while supporting Iwata. The Japan Restoration Party said it will endorse Kuroda and Iwata and oppose Nakaso. The main opposition Democratic Party of Japan said yesterday it opposed Iwata because he advocates changing the central bank law to give the government more control in setting policy.

‘Yen Correction’

“The objection to Iwata’s nomination is being used as an excuse for the yen correction,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo.
Current Governor Masaaki Shirakawa is due to step down along with his two deputies on March 19. Iwata may be confirmed without backing from the DPJ if Prime Minister Shinzo Abe can secure the support of the smaller opposition parties.
The three-month dollar-yen risk reversal rate slid to negative 0.1175 percent, the lowest since June 5, indicating increased demand for options that grant the right to buy Japan’s currency versus the greenback.
The yen has slumped 7.8 percent this year, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes amid expectations a new BOJ leadership will boost cash infusions. The dollar rose 2.7 percent on signs the U.S. recovery is gathering pace.
U.S. retail sales increased 0.5 percent last month, after gaining 0.1 from January when they rose 0.1 percent, according to a Bloomberg News survey of economists before today’s Commerce Department report. The jobless rate dropped in February to the lowest since December 2008, the Labor Department said last week.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, dropped 0.2 percent to 82.416 after rising to 82.924 on March 8, the highest since Aug. 3.
To contact the reporters on this story: Anchalee Worrachate in London at; Masaki Kondo in Singapore at
To contact the editor responsible for this story: Paul Dobson