Yen Halts Decline Toward 100 as Japanese Sold Offshore Bonds

By Candice Zachariahs & Kevin Buckland 

The yen halted a decline that took it to within 0.1 percent of 100 per dollar after official data showed Japanese investors sold foreign bonds.

The yen rose versus 15 of 16 major counterparts as a technical indicator signaled the currency may pare its 6.6 percent loss against the dollar since the Bank of Japan (8301) expanded monetary easing last week. Australia’s dollar fell against most of its major peers after the statistics bureau said the nation’s unemployment rate unexpectedly rose in March. South Korea’s won rose for a third day after the nation’s central bank kept its key rate unchanged. “It is quite a surprise to see that Japanese investors were net sellers of foreign bonds,” Sebastien Galy, a foreign- exchange strategist at Societe Generale SA in New York, said in an e-mailed response to questions. “The yen’s gains today could be a factor of that negative surprise.”

The yen gained 0.2 percent to 99.59 per dollar at 1:09 p.m. in Tokyo after yesterday touching 99.88, the weakest since April 14, 2009. Japan’s currency rose 0.3 percent to 130.06 per euro after yesterday falling as low as 130.54, the least since January 2010. The euro slipped 0.1 percent to $1.3059.

Japanese investors were net sellers of foreign debt in the week ended April 5, according to data released by the Ministry of Finance today. They sold 1.14 trillion yen ($11.4 billion) in overseas bonds and notes, purchased 6.3 billion yen in overseas stocks and bought 75.5 billion yen in overseas short-term securities.

‘Take Profit’

Haruhiko Kuroda said the unprecedented stimulus announced on April 4 after his first meeting as BOJ governor is enough to achieve a 2 percent inflation goal.

The central bank has taken all “necessary” and “possible” measures, Kuroda told reporters in Tokyo yesterday. While officials will change policy as needed, he doesn’t expect adjustments each month, he said. The BOJ chief reiterated a pledge to do what’s needed to meet the price target in two years.

The 14-day relative strength index of the yen versus the dollar slid to 27 yesterday, below the 30 level that some traders use as a signal that an asset’s value has fallen too far, too fast. Versus the euro, the yen’s RSI was at 28.

“There’s certainly some interest in the market to take profit on short yen positions, which is providing pause in the general yen depreciation trend,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington.

Australia Jobs

Japan’s currency has dropped 4.2 percent in the past week, the worst performance among 10 developed nation currencies tracked by Bloomberg Correlation Weighted Indexes.

The Aussie dollar weakened versus the greenback and yen after the statistics bureau in Sydney said the jobless rate rose to 5.6 percent, the highest since November 2009, as employers cut 36,100 jobs in March. Economists surveyed by Bloomberg News had predicted the jobless rate would remain unchanged at 5.4 percent.

“We’ll probably see weakness on the crosses for the next couple of days, as the view on a recovery in the Australian labor market remains challenged, and also the RBA retains its easing bias,” said Andrew Salter, a foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. (ANZ), referring to Australia’s dollar against its peers.

The Aussie slipped 0.5 percent to 104.67 yen and traded 0.3 percent lower at $1.0511 after yesterday touching $1.0552, the most since Jan. 24.

Missile Threat

South Korea’s won gained as much as 0.8 percent as the central bank held borrowing costs unchanged at 2.75 percent for a sixth month. Nine of 20 economists surveyed by Bloomberg predicted the move while the remainder forecast a 25-basis-point cut.

The won strengthened 0.5 percent to 1,130.28 per dollar.

Gains were tempered as South Korea said the North may fire a missile in coming days. Kyodo News said North Korea had moved a launchpad to a raised position, citing an unnamed Japanese Defense Ministry official.

The possibility of a ballistic missile launch is “very high” and “may materialize anytime from now,” South Korean Foreign Minister Yun Byung Se told lawmakers in Seoul yesterday.

To contact the reporters on this story: Candice Zachariahs in Sydney atczachariahs2@bloomberg.net; Kevin Buckland in Tokyo at kbuckland1@bloomberg.net

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