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Sunday, 14 April 2013
Yen Falls Toward 100 per Dollar as Kuroda Repeats Two-Year Goal
By Kevin Buckland & Masaki Kondo - Apr 15, 2013 5:10 AM GMT+0400
The yen fell against its 16 major peers as Bank of Japan (8301) Governor Haruhiko Kuroda reiterated plans to achieve 2 percent annual inflation within two years.
The yen retreated from a one-week high as analysts predicted it will slide even as a Group of 20 meeting looms this week where Japan may face criticism for stimulus efforts that have devalued the currency. Kuroda, who surprised markets April 4 by doubling monthly bond purchases in an effort to end deflation, said there are signs Japan’s economy is picking up as he delivered the first of two speeches scheduled for today.
A customer holds a 1,000 yen bank note at a supermarket in Tokyo. The yen has lost at least 6 percent against all of its 16 major peers tracked by Bloomberg this year. Photographer: Tomohiro Ohsumi/Bloomberg
“The trend for a test of 100 yen to the dollar hasn’t changed,” said Kengo Suzuki, a currency strategist at Mizuho Securities Co. in Tokyo, a unit of Japan’s third-biggest financial group by market value. “It’s just a matter of time.”
The yen fell 0.2 percent to 98.52 per dollar as of 10:09 a.m. in Tokyo after touching 97.63, the strongest since April 8. It depreciated to 99.95 yen per dollar on April 11, the weakest since April 2009. It was little changed at 129.10 per euro. The euro slipped 0.1 percent to $1.3106.
G-20 finance ministers and central bankers meet on April 18 and April 19 in Washington ahead of weekend talks of the International Monetary Fund and World Bank. At their last meeting in February, they signaled that Japan could stimulate its stagnant economy as long as policy makers refrained from publicly advocating a sliding yen.
In a planning document prepared for the G-20 talks, the European Union will note the “lack of credible medium-term fiscal consolidation plans in the U.S. and Japan.” It will push Tokyo to make structural reforms to an economy roiled by repeat recessions over the past two decades, the document said.
The U.S. Treasury said it would pressure Japan to avoid “targeting its exchange rate for competitive purposes” in its semi-annual currency report to Congress released in Washington on April 12.
“You can’t tell me there’s not a currency war going on,” Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said in a posting on Twitter yesterday. “Sell yen.”
The yen has depreciated 20 percent against its U.S. counterpart in the past six months, extending the drop after the Bank of Japan expanded monetary easing at its meeting that ended April 4.
The Bank of Japan pledged to double the monetary base by the end of 2014 through purchases of government bonds as it targets 2 percent inflation within two years in a bid to revive the nation’s economy. Governor Kuroda said April 12 that monetary easing tends to weaken a currency, but the BOJ’s polices aren’t aimed at exchange rates.
Kuroda reiterated that he has a two-year time horizon in mind for achieving his inflation goal in a speech at a BOJ branch manager’s meeting in Tokyo, the first of two speeches today. The second is at the annual meeting of the Trust Companies Association of Japan in the afternoon.