By Yasuhiko Seki and Yoshiaki Nohara
Nov. 30 (Bloomberg) -- The yen and dollar fell against higher-yielding currencies after the United Arab Emirates’ central bank said it “stands behind” the country’s banks, easing concern about a default by state-owned Dubai World.
The euro advanced for the first time in five days against the yen after the Abu Dhabi-based central bank of the U.A.E. said lenders will be able to borrow using a special facility tied to their current accounts. The Australian and New Zealand dollars rallied as demand for riskier assets increased due to allayed concern over credit losses in the Middle East.
“The decision by U.A.E. helped calm down credit woes,” said Akane Vallery Uchida, foreign-currency strategist in Tokyo at Royal Bank of Scotland Group Plc. “The yen, which was bought over jitters in Dubai, is being sold.”
The yen fell to 129.87 per euro as of 7:40 a.m. in London, from 129.67 on Nov. 27 in New York. The euro strengthened to $1.5068, from $1.4988. The yen gained to 86.21 per dollar, from 86.53. It rose to a 14-year high of 84.83 on Nov. 27.
Australia’s dollar jumped to 91.91 U.S. cents, from 90.63 cents and strengthened to 79.25 yen, from 78.43. New Zealand’s dollar advanced to 72.08 U.S. cents, from 71.11 cents, and gained to 62.16 yen, from 61.52 yen.
The MSCI Asia Pacific Index of regional shares rose 3.5 percent and the Nikkei 225 Stock Average jumped 2.9 percent.
The yen’s decline against the euro was tempered by renewed concerns about state-owned Dubai World. Dubai’s property developer Nakheel PJSC asked Nasdaq Dubai to suspend the trading on all its Islamic sukuk bonds until it is in a position to provide further information, according to a statement to the Dubai bourse.
‘Impact Spreading’
“Dubai’s impact is spreading with the report on Nakheel,” said Takeshi Tokita, vice president of foreign-exchange sales at Mizuho Corporate Bank Ltd. in Tokyo. “That stoked concerns about the global market, causing yen-crosses to be sold.”
The dollar earlier climbed against the yen for the first time in five days as a report showed retail sales on Black Friday and the weekend after Thanksgiving advanced 0.5 percent from a year earlier.
The U.S. currency dropped 2.7 percent last week against the yen, the biggest weekly decline since the period to Aug. 14, as stock markets slumped after state-owned Dubai World sought to delay payments on debt.
Work Closely
Japanese Finance Minister Hirohisa Fujii was quoted by the Mainichi newspaper as saying the government won’t intervene to weaken the yen.
The government should work closely with the Bank of Japan to deal with the strengthening yen, Mainichi reported Fujii as saying. He made the remarks last night to reporters after discussing the yen-dollar exchange rate with Prime Minister Yukio Hatoyama, the newspaper said.
Fujii denied today saying he has ruled out intervening in foreign-exchange markets.
“I never said that,” Fujii told reporters in Tokyo today when asked about remarks he made yesterday.
“The market is already convinced that the Japanese government won’t intervene at the current level,” said Kazutoshi Yasuda, general manager of the markets department in Tokyo at FX Prime Corp., a foreign-exchange unit of Japanese trading house Itochu Corp.
Bank of Japan Governor Masaaki Shirakawa said today it’s up to the government to decide whether to intervene in the foreign- exchange market.
Rapid Appreciation
“The bank pays due attention to the effects of the recent rapid appreciation of the yen on business sentiment of the firms that are on the road to recovery, as well as to the effects of international financial developments,” Shirakawa said at a business meeting in Nagoya, central Japan. “It would be important, above all, for a central bank to examine the economy without prejudgment.”
Japan hasn’t sold its currency since March 16, 2004, when it was at about 109 per dollar. The BOJ sold 14.8 trillion yen ($172 billion) in the first three months of 2004, after record sales of 20.4 trillion yen in 2003. Japan last bought the currency in 1998 as the rate fell as low as 147.66.
Contracts granting the right to buy the yen versus the dollar rose last week to a 2.1 percentage-point premium relative to options for selling Japan’s currency, according to Bloomberg data. The odds of the yen strengthening past 84.83 per dollar to 84.5 by the end of March rose to 80 percent, options data compiled by Bloomberg show.
‘Spread Fears’
Dubai World, a state-owned holding company struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a standstill agreement with creditors and an extension of loan maturities until at least May 30, 2010. The news led to a slump in global financial markets and raised prospects of new loan losses for U.A.E. and foreign banks.
“Dubai World’s news spread fears over potential risks in emerging markets,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Co., a unit of France’s third-largest bank. “Underlying concerns here may encourage investors to repatriate funds from emerging and commodity markets.”
To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
Posts
No comments:
Post a Comment