Sun, Apr 24, 2005 - Page 10 News List

Yen posts solid gains in wake of Koizumi's apology

BLOOMBERG

The yen rose the most in two months against the dollar and surged versus the euro after Japanese Prime Minister Junichiro Koizumi's apology for wartime suffering in neighboring Asian nations eased concern that Japan will lose business in China.

"The apology is a real positive for the yen," said David Mann, a currency strategist at Standard Chartered Plc in London. "Growing tensions between the two countries and potential spill-over effects for the Japanese economy, with growing moves for a boycott, meant it was a real risk for the yen."

The yen rose to ?106 per dollar at 5:40pm in New York, from ?106.94 late Thursday, according to electronic currency-dealing system EBS. It rose to ?138.49 per euro from ?139.54. The yen also rose against the Korean won, Swiss franc and British pound after Koizumi said he will meet with Chinese President Hu Jintao (胡錦濤) today.

Japan's currency is also being buoyed after US Federal Reserve Chairman Alan Greenspan said on Thursday that China will probably end the yuan's decade-old peg to the dollar "sooner rather than later." A stronger yuan may reduce the competitiveness of China's exports compared with Japan's.

"Any probability of China revaluing will lead to stronger Asian currencies," said Mark Austin, head of global currency strategy in London at HSBC Holdings Plc. "Japan has been worried about a loss of competitiveness as China keeps its currency low, so if the Chinese currency goes higher, Japan will be happier to allow its currency to strengthen."

The yen had its biggest weekly advance against the dollar in three months, gaining 1.8 percent. Friday's gain is the largest since Feb. 22 against the US dollar and March 21 versus the euro.

The greenback fell to US$1.3065 per euro from US$1.3047. It rose for the first day in five on Thursday, paring the week's losses, after the Federal Reserve Bank of Philadelphia's index of regional manufacturing for April rose to the highest this year. Other recent reports including US retail sales, consumer confidence and housing starts were below economists' forecasts.

"I'm favoring a slightly weaker dollar," said Russell LaScala, chief currency dealer in New York at Deutsche Bank AG. "Take Philly Fed out and the numbers have been slightly weak."

This story has been viewed 3282 times.
TOP top