BLBG: Yen Near 5-Week High on Asian Stock Decline, Banking Concerns
By Yoshiaki Nohara and Ron Harui
Nov. 18 (Bloomberg) -- The yen traded near a five-week high against the dollar as a decline in Asian stocks and speculation that Japan’s biggest banks are under pressure to raise capital spurred demand for the currency as a haven.
The dollar was near the strongest in two weeks versus the euro on prospects that investors will trim bets on a further decline in the greenback before the end of this year. The U.K. currency was near a two-month peak against the euro before the Bank of England releases today the minutes of its Nov. 5 meeting, where policy makers expanded their asset-buying program by 25 billion pounds ($42 billion) to 200 billion pounds.
“The business environment for Japanese banks is still severe so there’s a need for them to procure more capital,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “It’s a risk-aversion factor, so the yen may be bought.”
The Japanese currency traded at 89.16 per dollar as of 2:27 p.m. in Tokyo from 89.25 in New York yesterday, when it advanced to 88.74, the highest level since Oct. 9. The Japanese currency was at 132.72 per euro after climbing as high as 132.45 yesterday, the strongest level since Nov. 3.
The euro fetched $1.4887 from $1.4876 yesterday, when it fell to $1.4808, the weakest since Nov. 4. The pound fetched 88.59 pence per euro after climbing to as high as 88.34 pence yesterday, the strongest since Sept. 15.
The Nikkei 225 Stock Average dropped 0.7 percent and the MSCI Asia Pacific Index of regional shares slipped 0.2 percent.
Japanese Banks
Japan’s currency rose against all 16 of its most-traded counterparts as five people familiar with the matter said Mitsubishi UFJ Financial Group Inc. will announce today a share sale of about 1 trillion yen ($11.2 billion), Japan’s largest secondary offering.
Mitsubishi UFJ, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. trail the world’s biggest banks in capital strength. Leaders meeting at the Group of 20 Summit in Pittsburgh in September agreed to draw up rules by the end of 2010 requiring banks to hold more and better-quality capital.
Japanese investors sold 1.49 trillion yen more in foreign bonds and notes than they bought in October, the most since August 2008, according to data from the Ministry of Finance.
The yen tends to gain in times of financial turmoil as Japan’s trade surplus reduces reliance on foreign capital.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
