By Ron Harui
The yen rose for the fifth time in six days against the euro after Singapore said its economy may shrink the most in its 44-year history and on speculation a report this week will show China’s economy cooled to the slowest in almost a decade. The euro halted two days of gains versus the greenback on concern a German report tomorrow will show wholesale prices fell for an eighth month, supporting the case for the region’s central bank to cut interest rates.
“There doesn’t seem to be much improvement in the real economies” around the world, said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s biggest bank. “The yen is likely to be bought and the dollar also may be bought as a ‘safe-haven’ currency.”
The yen rose to 133.11 per euro as of 1:09 p.m. in Tokyo from 133.81 in New York yesterday. Japan’s currency climbed 0.8 percent against Australian dollar to 72.70 and advanced 0.6 percent versus New Zealand’s dollar to 58.89. It climbed to 99.82 versus the dollar from 100.10. The dollar climbed to $1.3344 versus the euro from $1.3368 yesterday.
The Nikkei 225 Stock Average dropped 1.5 percent and Standard & Poor’s 500 Index futures fell 0.9 percent. Sumitomo Realty & Development Co., Japan’s third-largest developer, sank 6.9 percent in Tokyo after missing its profit target.
Prices Decline
The euro declined the most against the yen in a week before Germany’s Federal Statistics Office releases its report on wholesale prices tomorrow. Prices slumped 7.1 percent in March from a year earlier, according to a Bloomberg News survey of economists.
Europe’s single currency also weakened on concern ECB officials this week will signal they may keep lowering rates to support growth. Council member Axel Weber will speak in Hamburg tomorrow and Erkki Liikanen will deliver a speech in Helsinki the following day. ECB President Jean-Claude Trichet said last week the central bank is studying unorthodox ways of boosting the economy.
“We continue to hold the view that the euro remains laden by expectations of another rate cut and the prospect of unconventional monetary easing,” Emmanuel Ng, a Singapore-based economist at Oversea-Chinese Banking Corp., wrote in a research note today.
Singapore, China
Singapore’s economy may contract as much as 9 percent this year, the trade ministry said in a statement, reducing its forecast for the third time since early January.
China’s gross domestic product expanded 6.3 percent in the first quarter from a year earlier, according to the median estimate of economists surveyed by Bloomberg News, down from 6.8 percent the previous three months. The report is due April 16.
Singapore’s dollar climbed against all of the 16 most- active currencies after the city-state’s central bank said in its twice-yearly policy review that it sees no reason for “any undue weakening” of the local currency.
The Monetary Authority of Singapore “re-centered” the trading band in which the local dollar is managed and said it doesn’t plan to seek either appreciation or depreciation.
“Some in the market had been expecting the MAS to go to a depreciation policy,” said Thomas Harr, a senior currency strategist at Standard Chartered Bank in Singapore. The Singapore dollar “has found a floor now and we are actually trading in the strong half of the band.”
Singapore’s dollar advanced 0.9 percent to S$1.5017 after touching S$1.4963, the strongest level in two months.
The Singapore dollar has largely moved in the lower half of the previous policy band since the previous review in October, the central bank said. The currency is down 4.9 percent this year versus the greenback, having slid on speculation the authorities would weaken it to help combat the nation’s worst recession on record.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.
Last Updated: April 14, 2009 00:11 EDT
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