Yen Gains After Brazil Announces Currency Curbs; Aussie Climbs on Job Data

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  • Posted on April 6, 2011


    The yen rose to 85.38 per dollar as of 8:19 a.m. in Tokyo from 85.49 yesterday in New York, when it reached 85.53, the weakest level since Sept. 21. Photographer: Tomohiro Ohsumi/Bloomberg

    The yen rose against most of its major counterparts, paring the past month’s losses, on concern Brazil’s efforts to stem gains in its currency will spur sales of emerging-market assets.

    The yen strengthened for the first time in 11 days versus the dollar as technical charts showed its recent decline was excessive and on speculation Japanese exporters took advantage of the currency’s slide to a six-month low to purchase it. Australia’s dollar climbed to a record versus the greenback after a government report showed the jobless rate unexpectedly dropped last month.

    “Risk-aversion buying of the yen and the Swiss franc may arise should Brazil’s measures lead to selling of emerging- market assets,” said Tsunemasa Tsukada, chief manager for currencies and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest financial group by market value.

    The yen climbed to 122.14 per euro as of 12:28 p.m. in Tokyo from 122.52 in New York yesterday, when it fell to 122.61, the weakest level since May 5. Japan’s currency rose 0.2 percent to 85.32 per dollar after sliding to 85.53 yesterday, the lowest since Sept. 21. The euro fell to $1.4314 from $1.4331. The franc gained 0.1 percent to 1.3153 per euro.

    Brazilian Tax

    Brazil extended a tax on foreign-based loans to stem gains in the real after its currency reached a two-and-a-half-year high this week, making the nation’s exports less competitive.

    Starting today, banks and companies will have to pay a 6 percent tax when borrowing overseas for up to two years, Finance Minister Guido Mantega told reporters in Brasilia. Earlier this week, President Dilma Rousseff’s government broadened the same tax on foreign loans of up to one year from three months.

    The yen rallied from near a six-month low versus the dollar as a technical indicator signaled its decline was overdone.

    The dollar’s 14-day relative strength index versus the yen was at 72 today, above the 70 threshold that suggests the greenback’s rally from a postwar low of 76.25 yen on March 17 low has been too rapid.

    Large Japanese manufacturers forecast on average that the yen will trade at 84.20 per dollar in the year through March 2012, according to the Bank of Japan’s Tankan business- confidence survey released April 1.

    ‘Looks Oversold’

    “The yen looks oversold and exporters are apparently buying the currency to capitalize on its rapid weakness,” said Lee Wai Tuck, a foreign-exchange strategist at Forecast Pte in Singapore. “The near-term bias for the yen is likely to be positive.”

    The yen has slumped 7.5 percent since its close on March 17, the day before the Group of Seven nations jointly intervened in markets to drive the currency down from its postwar high.

    Australia’s dollar rose against all its major counterparts after the statistics bureau said the unemployment rate declined to 4.9 percent in March from 5 percent the previous month. Economists surveyed by Bloomberg forecast the rate to be unchanged.

    Employers in Australia added 37,800 workers in March from the previous month, the statistics bureau said.

    “The jobs number was very strong across the board,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “This will only encourage the Aussie bulls on a multi-day basis. If you’re bearish the U.S. dollar and looking for an alternative, then the Aussie remains very attractive.”

    Australia’s dollar gained 0.3 percent to $1.0468 after earlier rising to $1.0482, the strongest since it was freely floated in 1983.

    — With assistance from Candice Zachariahs in Sydney and Lilian Karunungan in Singapore. Editors: Nicholas Reynolds, Jonathan Annells

    To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

    To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

    Bloomberg/AC