Yen Extends Drop Past 100 Per Dollar After Bonds Data

By Kevin Buckland & Masaki Kondo 

The yen extended its decline beyond 100 per dollar after a report showed Japanese investors became net buyers of foreign bonds, snapping the longest selling streak since January 2010.

Japan’s currency fell against all but one of its 16 major peers as the data supported speculation the Bank of Japan’s stimulus measures are driving domestic investors to seek higher returns outside the country. It weakened beyond 100 per dollar yesterday for the first time in more than four years. Australia’s dollar dropped toward parity with its U.S. counterpart after the Reserve Bank cut its benchmark interest rate to a record low this week. “For yen bears, I think they would be encouraged” by today’s data, said Roy Teo, a currency strategist at ABN Amro Bank NV in Singapore. “The yen should weaken toward around the 104 level in the second quarter and about 110 at the end of this year.”

The yen dropped 0.5 percent to 101.11 per dollar as of 10:49 a.m. in Tokyo after earlier touching 101.2, the weakest since April 6, 2009. It slid 0.4 percent to 131.78 per euro. Europe’s single currency was little changed at $1.3036.

For the week, the yen has weakened 2.1 percent against the dollar, the biggest five-day decline since the period ended April 5. It has fallen 1.5 percent versus the euro. The 17-nation currency has slipped 0.6 percent against the greenback since May 3.

Net Buyers

Japanese investors were net buyers of foreign bonds in the past two weeks, after six straight weeks of sales, Ministry of Finance statistics showed today. They bought a net 309.9 billion yen ($3.1 billion) of foreign bonds in the seven days to May 3, and 204.4 billion yen’s worth the week before.

Japan’s currency will be at 104 per dollar at year-end, according to the median of more than 50 economist estimates compiled by Bloomberg.

The yen has dropped 4.7 percent since April 4 when BOJ Governor Haruhiko Kuroda outstripped economist forecasts by pledging to double monthly bond purchases and scoop up longer-term debt to reach a 2 percent annual inflation goal. The yen is heading for its eighth-straight monthly loss against the dollar, which would be the longest since nine months of declines ending in January 1996.

Australia’s dollar headed for its biggest weekly drop in more than a year after the RBA unexpectedly cut its benchmark interest rate to a record low 2.75 percent.

The so-called Aussie has fallen 2.3 percent this week, the most since the five days ended May 4, 2012. It slipped 0.1 percent to $1.0087 from yesterday, when it dropped to as low as $1.0047, the least since June.

To contact the reporters on this story: Kevin Buckland in Tokyo at kbuckland1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net

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