By Yoshiaki Nohara
Sept. 29 (Bloomberg) -- The yen fell against the euro for the first time in six days as Asian stocks rebounded and before a report forecast to show European confidence in the economy improved, damping demand for Japan’s currency as a refuge.
Japan’s currency declined against the dollar as Japanese Trade Minister Masayuki Naoshima asked for a probe into how a stronger yen will hurt exporters, stoking speculation Japan may intervene in currency markets. The dollar traded near a two-week high against the euro after European Central Bank President Jean-Claude Trichet said it’s “extremely important” to have a strong greenback.
“Economic fundamentals are improving, boosting demand for risk taking,” said Koji Fukaya, a senior currency strategist in Tokyo at Deutsche Bank AG. “Japan’s policy makers can’t just let the yen rise, which will hurt companies’ profits and reduce jobs.”
The yen dropped to 131.45 per euro as of 9:52 a.m. in Tokyo from 131.06 in New York yesterday. The yen declined to 90.01 per dollar from 89.63 yesterday, when it touched 88.24, the strongest level since Jan. 23. The dollar was at $1.4606 per euro from $1.4622. Yesterday it touched $1.4565 per euro, the highest level since Sept. 15.
The yen declined against all of its 16 major counterparts as Asian shares followed gains by U.S. equities. Japan’s Nikkei 225 Stock Average rose 0.8 percent, rebounding from yesterday’s 2.5 percent tumble, after the U.S.’s Standard & Poor’s 500 Index added 1.8 percent. MSCI’s Asian Pacific Index increased 0.3 percent.
Risk Appetite
“Risk appetite has improved because of the big bounce in U.S. equities,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “Speculators who have been betting on the yen’s strength should probably start reconsidering whether they should still be long on the yen.”
The European Commission in Brussels will report today that economic confidence in the euro zone gained to 82.7 this month from 80.6 in August, according to the median estimate of economists in a Bloomberg News survey. That would be the highest since September 2008.
Naoshima asked bureaucrats to investigate the yen’s effect on Japanese exporters, Yosuke Kondo, parliamentary secretary for the Trade Ministry, told reporters in Tokyo yesterday.
Fujii Comments
Japanese companies said they can remain profitable as long as the yen trades at 97.33 per dollar or weaker, according to a Cabinet survey released on April 22. Exports account for 12 percent of Japan’s economy, compared with 6 percent in the U.S.
The yen pared gains versus the dollar yesterday after Finance Minister Hirohisa Fujii said at a forum co-hosted by Bloomberg that he “never said I will leave the yen to strengthen” and that he didn’t necessarily accept gains in the currency.
Fujii earlier said he didn’t support a “weak yen,” fueling speculation the government won’t act to stem the currency’s 16 percent appreciation against the dollar in the past year. Central banks intervene in foreign-exchange markets by selling and buying currencies.
Yen Momentum
“The yen’s recent gains, fueled by market interpretation of Fujii’s comments, are losing momentum,” said Masato Mori, senior manager of the business and marketing department at NTT SmartTrade Inc. a unit of Nippon Telegraph & Telephone Corp.
A strong currency reduces the value of overseas profits for Japanese companies. Large Japanese manufacturers forecast the yen would average 94.85 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released July 1.
The dollar rose against the euro after Trichet told lawmakers in Brussels the “solidity of the dollar is very important.” The euro reached a one-year high of $1.4844 on Sept. 23, making European exports more expensive.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.
Last Updated: September 28, 2009 21:08 EDT
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