The yen weakened, falling toward 100 per dollar for the first time since April 2009, after Bank of Japan (8301) Governor Haruhiko Kuroda said he was emboldened to press ahead with a campaign to defeat deflation.
Japan’s currency dropped against 13 of its 16 major counterparts after the Group of 20 offered no opposition to the central bank’s monetary stimulus policies at a meeting last week inWashington. Sweden’s krona strengthened after Riksbank Deputy Governor Lars E.O. Svensson said he will leave the central bank after failing to get support for deeper interest-rate cuts. The euro rose for a third day versus the yen after Giorgio Napolitano was re-elected to a second term as Italian president.
April 19 (Bloomberg) -- South Korean Finance Minister Hyun Oh Seok said Japan’s weakening yen is hurting his country’s economy more than North Korean threats, an example of a “spillover” that merits discussion. Hyun spoke yesterday with Bloomberg News in Washington before a meeting of Group of 20 finance chiefs. John Dawson reports on Bloomberg Television's "On the Move." (Source: Bloomberg)
April 19 (Bloomberg) -- David Bloom, global head of currency strategy at HSBC Holdings Plc, talks about the yen, dollar and pound and expectations for central bank monetary policy. He speaks with Francine Lacqua and David Tweed on Bloomberg Television's "On the Move." (Source: Bloomberg)
April 18 (Bloomberg) -- Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo, talks about the outlook for Japan's economy and currency. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
April 16 (Bloomberg) -- Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd., discusses the yen and commodity prices. He talks with Mark Barton and Anna Edwards on Bloomberg Television's "Countdown." (Source: Bloomberg)
“The BOJ has definitely altered the psychology of the market” toward the yen, said Stephen Gallo, European head of currency strategy at Bank of Montreal in London. “The safe- haven attributes of the yen have been fundamentally and drastically altered for the foreseeable future.”
The yen fell 0.3 percent to 99.80 per dollar at 10:30 a.m. London time after depreciating to 99.90, the weakest level since it declined to a four-year low of 99.95 on April 11. Japan’s currency dropped 0.3 percent to 130.30 per euro. The euro was little changed at $1.3047.
G-20 finance chiefs and central bankers meeting on April 19 praised the measures taken by the BOJ this month aimed at increasing inflation to 2 percent within two years. They signaled the nation’s focus on supporting domestic demand was strong enough to allow them to ignore the side-effects on their own economies of a sliding yen.
“Winning international understanding gives me more confidence to conduct monetary policy appropriately,” Kuroda told reporters after the gathering. “We will continue our qualitative and quantitative easing for the next two years.”
The BOJ is scheduled to deliver its next policy statement inTokyo on April 26 after announcing larger-than-expected stimulus measures at its previous gathering on April 4.
The yen has dropped 5.6 percent against the dollar in April after falling for the previous six months, the longest losing streak since 2001.
Futures traders increased bets the yen will weaken versus the greenback, figures from the Commodity Futures Trading Commission showed last week. The difference in the number of wagers by hedge funds and other large speculators on a decline compared with those on a gain -- so-called net shorts -- was 93,411 on April 16, compared with 77,697 a week earlier.
The krona advanced at least 0.2 percent against all 16 of its major counterparts after Svensson said he would step down when his term expires next month.
“I haven’t managed to get support for a monetary policy that I consider would lead to better target fulfillment,” he said in a statement explaining his decision.
Svensson has advocated for bigger rate cuts than the majority of the central bank’s board, arguing his colleagues’ policies are costing jobs. He said last month the Riksbank’s record on inflation targeting was “poor” as price growth lags well behind its 2 percent goal.
The krona gained 0.4 percent to 8.5135 per euro and rose 0.3 percent to 6.5243 per dollar.
The euro rose toward the highest since January 2010 against the yen as Napolitano was re-elected on April 20 after the country’s divided Parliament failed to agree on a candidate in the first five rounds of voting.
Napolitano will now take the lead in trying to end the political gridlock that’s left the country without a new government eight weeks after inconclusive elections.
“As long as we can avoid the inevitability of elections, this weekend’s development is positive in that regard, then, that provides a little bit of support under the euro,” said Ray Attrill, global co-head of currency strategy at National Australia Bank Ltd. in Sydney.
South Korea’s won dropped the most in two weeks against the dollar on speculation policy makers will favor depreciation to support South Korean exporters as the yen’s slide to a four-year low makes Japanese rivals more competitive.
“The G-20 meeting raised concerns that there’s room for the yen to weaken further, which may hurt South Korea’s export competitiveness,” said Jeon Seung Ji, an analyst at Samsung Futures Inc. in Seoul. “Speculation that authorities may step in to weaken the won to protect exporters is pushing the currency lower.”
The won fell 0.3 percent to close at 1,119.05 per dollar after dropping as much as 0.7 percent, most since April 8.