Yen Holds Losses on Bets G-20 Will Endorse BOJ Stimulus The yen held losses against most major peers on bets Group of 20 finance ministers and central bankers meeting this week will endorse the Bank of Japan’s monetary easing that aims to stoke 2 percent inflation. Russian Deputy Finance Minister Sergei Storchak said the G-20 probably won’t call for a tapering of stimulus in nations including Japan. The euro traded near a six-week high versus the yen after Greek lawmakers approved austerity measures that clear the way for the next batch of bailout loans. Demand for the dollar was limited after Federal Reserve Chairman Ben S. Bernanke signaled the central bank’s asset purchases, which tend to debase the currency, hinge on economic performance. “We see the yen weakening further,” said Kengo Suzuki, the chief currency strategist at Mizuho Securities Co. in Tokyo, a unit of Japan’s third-biggest bank by market value. “Markets will expect additional easing once they are convinced that the BOJ will undershoot its price target, so Japan’s monetary policy is tilted toward further accommodation.” The yen was little changed at 99.66 per dollar as of 10:20 a.m. in Tokyo from yesterday, when it lost 0.5 percent. It was little changed at 130.69 per euro from yesterday, when it touched 131.36, the weakest since June 5. The 17-nation euro bought $1.3112 from $1.3125. “I don’t yet see a pressing need to demand anything from countries that are conducting quantitative easing,” Storchak said in Moscow on July 16 before G-20 policy makers meet in the Russian capital this week. “Europe, the U.S., and Japan aren’t ready in the current environment to turn away from easy-money policies.” The BOJ doubled monthly bond purchases to more than 7 trillion yen ($70 billion) in April, after Prime Minister Shinzo Abe urged the central bank to take steps to overcome deflation. Opinion polls have shown Abe’s Liberal Democratic Party and coalition partners are likely to win a majority in the upper house election this weekend, ending a hung parliament. Japan’s policies are well understood by G-20 members, Deputy Economy Minister Tasutoshi Nishimura said in a Bloomberg Television interview. An election victory will help the government to pursue policies, he said. Bernanke backed Japan’s stimulus efforts, saying in testimony to the House Financial Services Committee yesterday that the Asian nation’s monetary easing isn’t an attempt to manipulate its exchange rate. The Fed chairman, who’s due to testify to the Senate Banking Committee today, said that the Federal Open Market Committee wants to assure that the U.S. economy and labor markets have sufficient momentum before reducing monthly bond purchases. If the economy improved faster than expected, and inflation rose back “decisively” toward the central bank’s 2 percent target, “the pace of asset purchases could be reduced somewhat more quickly,” Bernanke said yesterday. The Fed would also be prepared to increase the pace of purchases “for a time, to promote a return to maximum employment in a context of price stability.” The Fed buys $85 billion of Treasuries and mortgage debt each month as part of its third round of quantitative-easing stimulus to cap borrowing costs. It has held the benchmark interest-rate target at a range of zero to 0.25 percent since 2008 to support the economy. The 10-year U.S. Treasury yield slid 1 basis point, or 0.01 percentage point, to 2.48 percent from yesterday, when it touched 2.46 percent, the lowest since July 3, according to Bloomberg Bond Trader data. “I think the Federal Reserve thinks long-term interest rates will go up, but what they are saying is that they are not going to go up too quickly,” David Kelly, the chief global strategist at JPMorgan Funds, said in a Bloomberg Television interview. “This is a little bit more of a sort of Bernanke put here for the bond market.” A put option gives investors the right to sell their asset at a set price. First-time claims for jobless benefits probably decreased by 15,000 to 345,000 in the week ended July 13, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department data today. Economists in a separate Bloomberg poll estimate people continuing to receive unemployment benefits fell by 18,000 to 2.96 million in the week ended July 6. In Europe, Greek lawmakers passed a bill that puts thousands of state workers on notice for possible dismissal, a victory for Prime Minister Antonis Samaras that clears the way for the country’s next bailout installment. The vote came hours before German Finance Minister Wolfgang Schaeuble arrives in Athens for a one-day visit. “Greece’s passage of the austerity bill may halt a decline in the euro in the near term,” said Mizuho’s Suzuki.
Posted on: Thu, 18 Jul 2013 02:20:48 +0000
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