By Molly Seltzer and Kim-Mai Cutler
March 9 (Bloomberg) -- The yen declined against the dollar, euro and Swiss franc as Japan posted its first trade deficit in 13 years, reducing the currency’s appeal as a refuge.
Britain’s pound slipped against the dollar and euro after the U.K. government took a majority stake in its biggest mortgage lender, Lloyds Banking Group Plc, and as HSBC Holdings Plc fell to the lowest level since May 1995. The dollar rose against 15 of the 16 most actively traded currencies as global stocks fell, supporting demand for safety.
“The worst trade data on record and first current account deficit posted in 13 years derailed the yen,” said Jack Spitz, managing director of foreign exchange at National Bank in Toronto. “There’s Japanese yen weakness and British pound weakness. You can take your pick on which will do worse.”
The yen weakened 0.7 percent to 98.99 per dollar at 8:27 a.m. in New York, from 98.25 on March 6. Japan’s currency depreciated 0.2 percent to 124.63 per euro from 124.34. The euro fell 0.5 percent to $1.2589 from $1.2653. The yen weakened 0.2 percent to 85.13 versus the franc from 84.94.
Japan, the world’s second-biggest economy, recorded a current-account deficit of 172.8 billion yen ($1.76 billion) in January, the Finance Ministry said in Tokyo. The median forecast of economists surveyed by Bloomberg News was for a 15.3 billion yen shortfall. It was the biggest trade deficit since January 1985, the earliest year for which there are comparable data.
“The poor Japanese trade-deficit data are giving further fuel to the idea that Japan, or the yen, is no longer the safe haven as the country’s external position deteriorates,” said Adam Cole, London-based head of global currency strategy at Royal Bank of Canada.
Asian central banks are abandoning a six-month campaign of defending their currencies, reversing course to cheapen exports that are falling the most in a decade.
Policy makers from India to Malaysia to Taiwan are letting their currencies depreciate after South Korea gave companies an edge by allowing the won to weaken 19 percent against the dollar this year. The won traded at 1,548.75 per dollar today.
The global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years, the World Bank said yesterday before a March 14 meeting of Group of 20 finance ministers. The assessment is more pessimistic than the International Monetary Fund’s report in January, which predicted 0.5 percent global growth this year.
Japan’s export-oriented economy shrank by an annualized 12.7 percent last quarter, the government said Feb. 16, the biggest contraction since the 1974 oil crisis.
The Dollar Index, which the ICE uses to track the greenback’s performance against the currencies of six major U.S. trading partners, rose 0.8 percent to 89.212. The index touched 89.624 last week, the highest level since April 2006.
Standard & Poor’s 500 Index futures expiring this month slipped 2 percent. The MSCI World Index lost 0.9 percent
The pound fell against all of the 16 major currencies after Lloyds Banking Group ceded control to the government in return for state guarantees covering 260 billion pounds ($367 billion) of risky assets. HSBC plunged the most in at least 23 years in Hong Kong, driven to a 13-year low on concern loan losses at its U.S. business will deepen.
Sterling lost 1.8 percent to $1.3844 and 1.3 percent to 90.96 pence against the euro.
Japan’s former top currency official said the yen may appreciate to a record 70 against the dollar this year, and officials shouldn’t intervene.
The yen is likely to fluctuate in a range between 100 and 70 as markets remain volatile because of financial turmoil, said Eisuke Sakakibara, who was known as “Mr. Yen” during his 1997- 1999 tenure at the Ministry of Finance. Sakakibara, who was the main opposition party’s top choice in 2003 to lead the finance ministry, correctly predicted in November that the yen would strengthen beyond 90 to the dollar.
“The deterioration in Japan and Europe are more serious than a slowdown in the U.S.,” and that will mean the yen will remain volatile, Sakakibara said in an interview last week. “While the yen will move wildly in this range, I do not see any need for the intervention and I also believe that the U.S. authorities would not permit it,” he said.
The worst is over for the Australian dollar, derivatives show, after the currency dropped by a record in 2008.
The currency will remain above last year’s 5 1/2- year low, the risk-reversal rate on one-month Australia-U.S. dollar options indicates. The rate rallied to a six- month high of minus 1.39 on Feb. 26, after dropping to a record on Oct. 27, when the currency slid to 60.10 U.S. cents, its weakest since April 2003. Negative values show more demand for options to sell a currency than for options to buy it.
The Aussie fell 0.8 percent to 63.56 U.S. cents today.
To contact the reporters on this story: Molly Seltzer in New York at mseltzer4@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net
Last Updated: March 9, 2009 08:28 EDT
March 9 (Bloomberg) -- The yen declined against the dollar, euro and Swiss franc as Japan posted its first trade deficit in 13 years, reducing the currency’s appeal as a refuge.
Britain’s pound slipped against the dollar and euro after the U.K. government took a majority stake in its biggest mortgage lender, Lloyds Banking Group Plc, and as HSBC Holdings Plc fell to the lowest level since May 1995. The dollar rose against 15 of the 16 most actively traded currencies as global stocks fell, supporting demand for safety.
“The worst trade data on record and first current account deficit posted in 13 years derailed the yen,” said Jack Spitz, managing director of foreign exchange at National Bank in Toronto. “There’s Japanese yen weakness and British pound weakness. You can take your pick on which will do worse.”
The yen weakened 0.7 percent to 98.99 per dollar at 8:27 a.m. in New York, from 98.25 on March 6. Japan’s currency depreciated 0.2 percent to 124.63 per euro from 124.34. The euro fell 0.5 percent to $1.2589 from $1.2653. The yen weakened 0.2 percent to 85.13 versus the franc from 84.94.
Japan, the world’s second-biggest economy, recorded a current-account deficit of 172.8 billion yen ($1.76 billion) in January, the Finance Ministry said in Tokyo. The median forecast of economists surveyed by Bloomberg News was for a 15.3 billion yen shortfall. It was the biggest trade deficit since January 1985, the earliest year for which there are comparable data.
“The poor Japanese trade-deficit data are giving further fuel to the idea that Japan, or the yen, is no longer the safe haven as the country’s external position deteriorates,” said Adam Cole, London-based head of global currency strategy at Royal Bank of Canada.
Reversed Course
Asian central banks are abandoning a six-month campaign of defending their currencies, reversing course to cheapen exports that are falling the most in a decade.
Policy makers from India to Malaysia to Taiwan are letting their currencies depreciate after South Korea gave companies an edge by allowing the won to weaken 19 percent against the dollar this year. The won traded at 1,548.75 per dollar today.
The global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years, the World Bank said yesterday before a March 14 meeting of Group of 20 finance ministers. The assessment is more pessimistic than the International Monetary Fund’s report in January, which predicted 0.5 percent global growth this year.
Japan’s export-oriented economy shrank by an annualized 12.7 percent last quarter, the government said Feb. 16, the biggest contraction since the 1974 oil crisis.
Dollar Index
The Dollar Index, which the ICE uses to track the greenback’s performance against the currencies of six major U.S. trading partners, rose 0.8 percent to 89.212. The index touched 89.624 last week, the highest level since April 2006.
Standard & Poor’s 500 Index futures expiring this month slipped 2 percent. The MSCI World Index lost 0.9 percent
The pound fell against all of the 16 major currencies after Lloyds Banking Group ceded control to the government in return for state guarantees covering 260 billion pounds ($367 billion) of risky assets. HSBC plunged the most in at least 23 years in Hong Kong, driven to a 13-year low on concern loan losses at its U.S. business will deepen.
Sterling lost 1.8 percent to $1.3844 and 1.3 percent to 90.96 pence against the euro.
Japan’s former top currency official said the yen may appreciate to a record 70 against the dollar this year, and officials shouldn’t intervene.
‘Mr. Yen’
The yen is likely to fluctuate in a range between 100 and 70 as markets remain volatile because of financial turmoil, said Eisuke Sakakibara, who was known as “Mr. Yen” during his 1997- 1999 tenure at the Ministry of Finance. Sakakibara, who was the main opposition party’s top choice in 2003 to lead the finance ministry, correctly predicted in November that the yen would strengthen beyond 90 to the dollar.
“The deterioration in Japan and Europe are more serious than a slowdown in the U.S.,” and that will mean the yen will remain volatile, Sakakibara said in an interview last week. “While the yen will move wildly in this range, I do not see any need for the intervention and I also believe that the U.S. authorities would not permit it,” he said.
The worst is over for the Australian dollar, derivatives show, after the currency dropped by a record in 2008.
The currency will remain above last year’s 5 1/2- year low, the risk-reversal rate on one-month Australia-U.S. dollar options indicates. The rate rallied to a six- month high of minus 1.39 on Feb. 26, after dropping to a record on Oct. 27, when the currency slid to 60.10 U.S. cents, its weakest since April 2003. Negative values show more demand for options to sell a currency than for options to buy it.
The Aussie fell 0.8 percent to 63.56 U.S. cents today.
To contact the reporters on this story: Molly Seltzer in New York at mseltzer4@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net
Last Updated: March 9, 2009 08:28 EDT
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