Thursday, 18 July 2013

Yen Declines on Bets G-20 to Endorse BOJ Stimulus; Dollar Climbs

By Mariko Ishikawa & Lucy Meakin - Jul 18, 2013 10:57 AM GMT+0400
The yen dropped for a second day against the dollar on bets Group-of-20 finance ministers and central bankers meeting this week will endorse the Bank of Japan’s monetary easing that aims to stoke 2 percent inflation.
Russian Deputy Finance Minister Sergei Storchak said the G-20 probably won’t call for a tapering of stimulus in nations including Japan. The dollar rose against all its major peers before data today economists say will signal improvement in the U.S. job market. The euro advanced toward a six-week high versus the yen after Greek lawmakers approved austerity measures that clear the way for the next tranche of international aid.
July 18 (Bloomberg) -- Japan's Deputy Economy Minister Yasutoshi Nishimura talks about the nation's growth outlook, government policies known as Abenomics, and the yen. He speaks from Singapore with John Dawson on Bloomberg Television's "First Up." (Source: Bloomberg)
July 17 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke says Japan doesn’t manipulate the yen to gain an edge for the nation’s exports, calling its recent monetary policy part of a wider strategy aimed at boosting the world’s third-largest economy. Bernanke speaks in response to questions from Representative Gary Peters, a Michigan Democrat, during his semiannual testimony before the House Financial Services Committee in Washington. (This is an excerpt. Source: Bloomberg)
July 9 (Bloomberg) -- Sacha Tihanyi, a currency strategist at Scotiabank in Hong Kong, talks about the outlook for Asian currencies. Tihanyi also discusses Federal Reserve monetary policy and its implications for global financial markets. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
“We see the yen weakening further,” said Kengo Suzuki, the chief currency strategist at Mizuho Securities Co. in Tokyo, a unit of Japan’s third-biggest bank by market value. “Markets will expect additional easing once they are convinced that the BOJ will undershoot its price target, so Japan’s monetary policy is tilted toward further accommodation.”
The yen weakened 0.6 percent to 100.18 per dollar as of 7:55 a.m. London time after depreciating 0.5 percent yesterday. The dollar advanced 0.2 percent to $1.3102 per euro. The 17-nation currency rose 0.4 percent to 131.25 yen after touching 131.38, the strongest since June 5.
“I don’t yet see a pressing need to demand anything from countries that are conducting quantitative easing,” Storchak said in Moscow on July 16 before G-20 policy makers meet in the Russian capital this week. “Europe, the U.S., and Japan aren’t ready in the current environment to turn away from easy-money policies.”

BOJ Purchases

The BOJ doubled monthly bond purchases to more than 7 trillion yen in April after Prime Minister Shinzo Abe urged the central bank to take steps to overcome deflation. Polls have shown Abe’s Liberal Democratic Party and coalition partners are likely to win a majority in the upper house election this weekend, ending a split parliament.
Japan’s policies are well understood by G-20 members, Deputy Economy Minister Yasutoshi Nishimura said in a Bloomberg Television interview. An election victory will help the government to pursue its policies, he said.
“Should the election turn out to be a big victory for the LDP, handing it a majority, that could stoke yen selling by overseashedge funds who may interpret it as a green light from the Japanese public for Abenomics to continue for the next three years,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo.

Bernanke Support

Federal Reserve Chairman Ben S. Bernanke backed Japan’s stimulus efforts, saying in testimony to the House Financial Services Committee yesterday that the Asian nation’s monetary easing isn’t an attempt to manipulate its exchange rate.
The Fed chairman, who’s due to testify to the Senate Banking Committee today, said that theFederal Open Market Committee wants to assure that the U.S. economy and labor markets have sufficient momentum before reducing asset purchases.
Bernanke said on June 19 he expects the Fed to begin slowing the buying of $85 billion of Treasuries and mortgage debt each month by the end of this year if its economic forecasts hold. The U.S. central bank has kept the benchmark interest-rate target at a range of zero to 0.25 percent since 2008 to support growth.

QE Pace

If the economy improved faster than expected, and inflation rose back “decisively” toward the central bank’s 2 percent target, “the pace of asset purchases could be reduced somewhat more quickly,” Bernanke said yesterday. The Fed would also be prepared to increase the pace of purchases “for a time, to promote a return to maximum employment in a context of price stability.”
“We maintain our view that the U.S. economy will gradually improve in the second half of this year,” said Yujiro Goto, a foreign-exchange strategist in New York at Nomura Holdings Inc. “There’s no need to change our view on a mild strength in the dollar.”
First-time claims for jobless benefits decreased by 15,000 to 345,000 in the week ended July 13, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department data today.
Analysts in a separate Bloomberg poll estimate people continuing to receive unemployment benefits fell by 18,000 to 2.96 million in the week ended July 6.
Greek lawmakers passed a bill that puts thousands of state workers on notice for possible dismissal, a victory for Prime Minister Antonis Samaras that clears the way for the country’s next bailout installment. The vote came hours before German Finance Minister Wolfgang Schaeuble arrives in Athens for a one-day visit.
“Greece’s passage of the austerity bill may halt a decline in the euro in the near term,” said Mizuho’s Suzuki.
To contact the reporters on this story: Mariko Ishikawa in Tokyo at; Lucy Meakin in London at
To contact the editor responsible for this story: Paul Dobson at