The yen bolster against all 16 major counterparts after Japan’s Economy Minister Akira Amari said further losses in the currency would threaten to negatively affect people and the government’s job is to minimize that. The yen decline from near its worst in more than four years against the greenback after Amari said yesterday there’s speculation the Japanese currency’s past strength has “been corrected a lot.” Wagers the dollar will gain versus the euro and yen bolstered last week amid bets the Federal Reserve will signal a tapering of bond purchases. New Zealand’s dollar strengthened as its finance minister said home price gains will pressure the Reserve Bank to raise interest rates.
“The market has been spooked by official suggestions the bulk of the yen depreciation may be behind us,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “Speculative longs in U.S. dollars have crept up to extreme levels and the comments sparked a dash for the exit.” A long position is a bet a currency will rise.
The yen boosted as much as 1.1 percent, before exchanging 0.4 percent greater at 102.86 per dollar as of 10:24 a.m. in Tokyo. The currency reached 103.31 on May 17, the worst since October 2008. It soared 0.5 percent to 131.91 per euro. The dollar slightly moved at $1.2831 per euro.
“It’s being said excessive yen gains have been corrected a lot,” Amari said on public broadcaster NHK. “If the yen extends losses a lot, people’s lives will be negatively affected. It’s our job to minimize that.”
Worst mover
The yen has dropped 20 percent over the past six months, the worst performance among 10 developed nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar has gained 3.7 percent and the euro is up 3.8 percent.
The difference in the number of wagers by hedge funds and other large speculators that the dollar will gain versus the yen compared with those on a decline -- so-called net longs -- was 88,407 on May 14, compared with 78,560 a week earlier, figures from the Washington-based Commodity Futures Trading Commission show. Net-long bets that the greenback will advance against the euro rose to 46,921, from 33,533 a week earlier.
The dollar has been boosted by speculation the Fed is going to signal a paring back of its easing policies. Fed Bank of San Francisco President John Williams said May 16 that quickening economic growth and gains in the job market may prompt the central bank to begin tapering its bond buying as soon as this summer. Williams was one of the first Fed officials to advocate open-ended bond purchases. Philadelphia Fed Bank President Charles Plosser said a week earlier he’d favor a June reduction.
‘Bullish Readings’
“We’ve started to see bullish readings on U.S. economic data, and a reduction in quantitative easing is being talked about,” said Marito Ueda, the senior managing director at FX Prime Corp. (8711), a currency-margin company in Tokyo. “The dollar has the advantage from the perspective of fundamentals” over other currencies.
The central bank is buying $85 billion a month of Treasury and mortgage bonds to push down borrowing costs and spur growth. Fed Chairman Ben S. Bernanke is scheduled to speak to the Joint Economic Committee of Congress on May 22. Minutes of the Fed’s last policy meeting will be released the same day.
The New Zealand dollar climbed 0.4 percent to 80.96 U.S. cents.
“These households heading into quite high debt to buy highly priced houses need to be aware at some stage the RBNZ will increase interest rates, particularly if the housing market keeps growing at rapid rates,” English said yesterday in an interview broadcast on Television New Zealand’s Q+A.
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