By Yasuhiko Seki and Ron Harui
Oct. 27 (Bloomberg) -- The dollar fell, ending a two-day advance against the euro, on revived optimism that the global economy recovery is spurring demand for so-called carry trades.
The greenback dropped versus 13 of 16 major counterparts after a Chinese government spokesman said industrial output may rise 16 percent in the fourth quarter. The yen declined versus Australia’s dollar after the South Pacific nation’s business confidence surged in the third quarter, backing the case for the central bank to raise interest rates.
“The latest output forecast from China immediately brightened the prospects of the global economy,” Daisaku Ueno, chief analyst at Gaitame.Com Research Institute Ltd., a unit of Japan’s largest currency margin company. “Risk-sentiment improved, triggering buying of higher-yielding currencies such as the Aussie, which benefits from a recovery in China.”
The dollar dropped to $1.4921 per euro as of 6:54 a.m. in London from $1.4876 in New York yesterday. The yen bought 137.23 versus the euro from 137.10, and fetched 91.97 against the dollar from 92.19.
Australia’s dollar climbed to 92.11 U.S. cents from 91.62 cents in New York yesterday. It rose to 84.68 yen from 84.45 yen.
Ministry of Industry and Information Technology spokesman Zhu Hongren commented on China’s industrial output in an online briefing today.
An index of Australian business confidence rose to 16 points from minus 4 points in the previous quarter, National Australia Bank Ltd. said, citing its quarterly survey of 930 companies conducted between the end of August and early September.
Kiwi Reverses
The New Zealand dollar reversed earlier losses as renewed global optimism stoked buying of the so-called kiwi.
“This global pool of investible funds has to find somewhere to get yield,” said David Forrester, a currency economist in Singapore at Barclays Capital, in a Bloomberg Television interview. “Commodity currencies are generally offering that. We do prefer the commodity currencies.”
New Zealand’s dollar, known as the kiwi, earlier slid after Prime Minister John Key said the currency’s recent strength was “helping offset any imported inflation concerns.”
“I would personally be surprised if they raise rates in 2009,” Key said, speaking of policy makers at the nation’s central bank.
The Reserve Bank of New Zealand, which acts independently of the government, will announce its next rates decision on Oct. 29. Consumer prices rose 1.3 percent in the third quarter, within the bank’s 1 percent to 3 percent targeted band. Key, a former foreign-exchange trader with Merrill Lynch & Co., said the country’s base rate is already “well above” most of its trading partners.
New Zealand’s dollar fell as much as 0.4 percent before trading at 75.03 U.S. cents from 74.77 in New York yesterday. It earlier touched 74.48 cents, the least since Oct. 20.
Japanese Exporters
Benchmark interest rates are 2.5 percent in New Zealand and 3.25 percent in Australia, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets and driving up their currencies.
The yen rose from a five-week low versus the dollar on speculation Japanese companies are bringing back earnings on overseas assets before the end of the month.
Large Japanese manufacturers expected the yen to average 94.50 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released Oct. 1. The forecast in the previous report was for a rate of 94.85.
“There’s talk that exporters are buying the yen,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This is causing the dollar-yen to dip.”
Toyota, Honda
Toyota Motor Corp. and Honda Motor Co., Japan’s two biggest automakers, may increase overseas production as a stronger yen makes exports less competitive. Japanese carmakers have lost U.S. market share to South Korea’s Hyundai Motor Co. after the yen rose to a 13-year high against the dollar in January.
“We must think about producing overseas what is now being produced in Japan,” Toyota Executive Vice President Takeshi Uchiyamada said at the Tokyo Motor Show yesterday. The yen may “have a big impact on Japanese production,” Honda’s President Takanobu Ito said.
Japanese Finance Minister Hirohisa Fujii reiterated today that he’s never voiced support for a stronger yen. He was speaking in Tokyo today.
To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
Posts
No comments:
Post a Comment