MW : WORLD FOREX: Yen Up On Exporter Buying, Sterling Weakness
The yen rose against the dollar and the euro in Asia Friday, as Japanese exporters repatriated profits while speculators pushed the yen to a four month high against the British pound amid speculation that the U.K. is comfortable with a weak currency.
Cross-trading pressure from the pound's weakness against the yen also caused the U.K. currency to hit a three-and-a-half-month low against the dollar, dealers said.
"Sharp drops in the British pound against the yen set the tone of the day,” prompting a wide range of players to snap up the yen versus various currencies, such as the euro, the dollar and the Australian currency, said Hideaki Inoue, chief foreign-exchange manager at Mitsubishi UFJ Trust and Banking. Japan’s exporters also sold foreign currencies before the second half of the fiscal year ends on Sept. 30, he said.
Dealers maintained that the U.S. currency could reach a January low of Y87.10 in the coming days given its broad weakness. Adding to its grim outlook is a sign that Japan’s authorities are reluctant to intervene to prop up the dollar, they said.
Sterling tumbled more than Y2 to Y144.34, its lowest level since May 18, dealers said, while the U.K. currency also touched $1.5915 against the U.S. dollar, its lowest level since June 8.
The pound remains under pressure after Bank of England Governor Mervyn King said in a recent newspaper interview that the currency’s weakness was "helpful" to the process of rebalancing the U.K. economy, traders said.
The greenback declined three-fourths of a yen from where it stood in New York late Thursday to Y90.56, before recovering to around Y90.70.
The euro dropped Y1.30 to Y132.52 although it later recouped some of its losses to around Y133.10. The single currency also pared some of its major losses overnight against the dollar, rising to $1.4700 from $1.4656.
Looking ahead, Inoue said that once the dollar breaks below the psychologically important Y90.00, “levels around Y87 will come into sight.” Most market participants “seem to just want to see a fall below Y90,” he said.
Traders will closely watch U.S. economic indicators due later in the global day, including durable goods orders and new home sales for August, to see if their pessimism toward the dollar is warranted. The focus is also on what the Group of 20 leaders will decide in their two-day summit ending Friday.
