Sharechat Logo

Dollar slides vs yen as Japanese Finance Minister talks down intervention

Monday 28th September 2009

Text too small?

The New Zealand dollar fell against the yen after the Japanese Finance Minister indicated he would refrain from pushing the currency lower, stoking demand for the safe haven currency amid repatriation of funds typical near the end of quarter.  

Japan’s Hirohisa Fujii told reporters at the Group of 20 Nations leaders’ summit in Pittsburgh that the Ministry of Finance was not inclined to halt the yen’s strength.

The comments underpinned support for the safe haven currency, which gained to a seven-and-a-half month high 89.67 per US dollar, amid cash flowing into Japan as fund managers reset their positions for the upcoming quarter.

Investors’ appetite for higher-yielding, or riskier, assets had already been trimmed after data showed demand for US durable goods unexpectedly fell last month.  

“A combination of US dollar and yen strength saw the kiwi knocked from its highs around 72 US cents,” said Danica Hampton, currency strategist at Bank of New Zealand. “Safe haven demand for the US dollar was supported by the durable goods report” and the big news over the weekend was Fujii’s comments, she said.  

The kiwi sank to 64.40 yen from 65.09 yen last week, and was little changed at 71.82 US cents from 71.90 cents.

It fell to 65.38 on the trade-weighted index, or TWI, a measure of the currency versus a basket of five trading partners, from 65.55 on Friday in New York, and declined to 82.60 Australian cents from 82.76 cents. It slipped to 48.82 euro cents from 48.97 cents last week.  

Hampton said the currency may trade between 71.30 US cents and 72.20 cents today, and will largely global data out of the US and Europe this week.  

Still, the National Bank Business Outlook, a leading economic indicator that has a strong correlation with the Quarterly Survey of Business Opinion followed by the central bank, may show a weaker headline confidence figure on its release tomorrow, as the gap between expectations and real activity continues to widen, she said.  

Policy makers at the G-20 summit lent some confidence to traders as they reiterated their support for the extraordinary stimulus measures put in place to cope with the financial meltdown of the past year. 

Even as the G-20 leaders repeated their support for ongoing stimulus measures, Federal Reserve Governor Kevin Warsh hinted that the US central bank may be preparing an exit strategy, saying “policy will likely need to be begin normalisation before it is obvious that it is necessary, possibly with greater force than is customary.” 

Businesswire.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar gains on G20 preference for growth
NZ dollar dips as Wellington CBD checked for quake damage
NZ dollar gains, bolstered by RBA minutes, strong dairy prices
NZ dollar falls after central bank says it may scale up currency intervention
NZ dollar gains before CPI, helped by dairy gains, rally on Wall Street
NZ dollar trades little changed as US budget talks bear down on deadline
NZ dollar falls with equities on view US to sail over fiscal cliff
NZ dollar weakens as fiscal cliff looms, long bets unwind
NZ dollar sinks to three-week low as equities fall, fiscal talks in focus
NZ dollar slips as fiscal cliff talks grind slower in Washington