February 8, 2013 10:09 am

Yen rises on minister’s comments

The Japanese yen strengthened against other major currencies after reports that the country’s finance minister said Japan’s currency had weakened more than intended, in what was seen as a cautionary move ahead of a meeting of finance ministers and central bank officials next week.

The reported comments from Taro Aso, Japan’s finance minister, saw the dollar fall 1 per cent against the yen to Y92.76 and the euro dip 1.3 per cent to Y123.89. Earlier in the week, the euro touched its strongest level against the yen since April 2010 while the dollar hit its highest level since May 2010.

The pace of the yen’s sell-off is widely expected to be a topic for discussion at next week’s G20 meeting in Moscow.

“The Aso comments could be related to the G20 meeting of finance ministers and central bank governors next week. Japan may be trying to avoid being singled out as a currency manipulator,” said Valentin Marinov, an analyst at Citigroup. 

The euro continued to fall in the wake of comments by Mario Draghi, president of the European Central Bank, on Thursday. Mr Draghi surprised markets by commenting on the recent strength of the single currency, warning that the exchange rate could pose a threat to the bank’s inflation outlook.

The euro fell 0.3 per cent against the US dollar to $1.3352, its weakest level in two weeks.

Currency analysts said the remarks might not be sufficient to stem the upward pace of the euro, however, which has risen as investors have returned to the eurozone this year. 

“The ECB policy mix is continuing to generate a favourable environment for asset markets, which could continue to attract investor inflows,” said analysts at Morgan Stanley. 

The pound continued to build on gains against the dollar and the euro following testimony from Mark Carney, the incoming governor of the Bank of England, on Thursday. Mr Carney sounded more hawkish than had been expected and more cautious on the prospect of introducing nominal GDP targeting in the UK, which is viewed as negative for the currency. 

Sterling rose 0.6 per cent against the dollar to $1.5844 and was 0.8 per cent higher against the euro at €1.1839. 

The Australian dollar was higher after better-than-expected trade figures out of China, a close trading partner with Australia. The figures helped the Aussie dollar to recover from losses earlier in the week, after the Reserve Bank of Australia held interest rates but signalled it was still considering future cuts to help the economy. 

The Australian dollar rose 0.3 per cent against the US currency to $1.0325 but fell against the Japanese currency as yen strength dominated trading, losing 0.7 per cent to Y95.63.

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