The euro rose against 12 of the 16 most-traded currencies after European Central Bank (ECB) President Jean-Claude Trichet said "economic fundamentals are sound" and that no policymakers are calling for interest rate cuts.
The euro gained for a second day versus the dollar, paring its 2 percent loss last week, after G7 officials released a statement warning of risks to growth from a US housing slump and financial market losses. The Australian dollar climbed after the nation's central bank said it is likely to raise borrowing costs.
"Trichet went to some pains to suggest that an ECB easing is not on the agenda," said Tony Morriss, a currency strategist at Australia & New Zealand Banking Group Ltd in Sydney. "That reads euro bullish."
The euro advanced to ¥156.03 at 7:08am in London from ¥155.71 late in New York Feb. 8. The currency climbed to US$1.4565 compared with US$1.4504. It also rose to 74.74 pence versus the pound from 74.55. The yen was at 107.16 per dollar from ¥107.30.
The euro might rise to US$1.4600 and ¥156.80 yesterday, Morriss said. Movements in currencies may be exaggerated because of public holidays in Japan and China yesterday, he said.
The euro extended gains after ECB council member Axel Weber told the Frankfurter Allegemeine Zeitung in an interview that the central bank is still concerned about inflation developments.
Australia's dollar, a favorite of so-called carry trades, was the best-performing major currency, as the Reserve Bank of Australia (RBA) raised its inflation forecast in its quarterly statement, prompting traders to boost bets policy makers will add to last week's rate increase. The currency gained 0.8 percent to US$0.9022 and 0.6 percent to ¥96.68.
Japan's benchmark interest rate of 0.5 percent compares with 7 percent in Australia, 3 percent in the US and 4 percent in Europe. The yield advantage on 10-year German bunds over similar maturity Japanese government bonds was 2.44 percentage points yesterday, up from 2.43 percentage points on Feb. 8.
South Africa's rand may extend this year's 12 percent decline versus the dollar as traders lose confidence in the government's ability to remedy a power shortage that has disrupted mining at the nation's precious-metals deposits.
"The currency is the share price of a country," said George Glynos, managing director of Johannesburg-based Econometrix Treasury Management, which advises investors on bond and foreign-exchange holdings. "If anyone wants to know what foreigners are thinking about South Africa at the moment, they need look no further than the rand."
The rand slumped 5.5 percent versus the dollar last week, the largest weekly drop since June 2006. It traded at 7.8263 yesterday.
The Canadian dollar declined against nine of the 16 most-active currencies after Bank of Canada Governor Mark Carney signaled at the G7 meeting of finance officials that he will lower borrowing costs. Canada's currency weakened to ¥107.26 from ¥107.40 on Friday.
"Inside the governing council we had no calls for an increase of rates, but equally no calls for cutting the rates," Trichet said in an interview with Japan's Nikkei Shimbun and Kyodo News on Feb. 10.
He said on Sunday the 15-nation region is "not in the same situation" as the US economy.
The G7 statement, released at the end of a weekend meeting in Tokyo, said "downside risks persist" for the global economy. The group also cited "heightened inflation expectations in some countries," suggesting some central banks want to limit rate-cut expectations.
The yen fell against the Australian dollar after traders increased bets the RBA will raise interest rates a quarter percentage point to 7.25 percent when policy makers meet next on March 4.
The yen weakened the most versus the Australian dollar, the Norwegian krone and the Swedish krona on speculation investors will buy higher-yielding assets funded by yen loans. It dropped 0.7 percent to ¥96.73 against the Australian dollar, 0.5 percent to ¥19.4747 versus the krone and declined 0.2 percent to ¥16.563 against the krona.
"The RBA was hawkish, reinforcing the outlook for another rate hike," said Norifumi Yoshida, vice president of the trading section in Singapore at Mizuho Corporate Bank Ltd, a unit of Japan's second-largest bank.
The yen may decline to ¥107.80 against the US dollar and ¥157 per euro yesterday, Yoshida forecast.
Bank of America Corp said in a report on Friday that Japan's economic growth may cool in the first half of this year and maintained its forecast for the yen to weaken to ¥110 against the dollar in three months and 113 in six months.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2