The yen rose for the first time in five days against the dollar as an opposition lawmaker said his party will oppose Bank of Japan Deputy Governor Nominee Kikuo Iwata, who the market sees as endorsing monetary policy easing.
The pound reached the weakest level since June 2010 versus the dollar and the lowest to the Australian currency since 1985 after industrial output unexpectedly declined. South Africa’s rand slid to the weakest in almost four years versus the dollar after the nation posted a larger-than forecast current-account deficit. The euro erased losses against the greenback as oil and gold rallied.
“It’s about whether the Democratic Party of Japan is going to block Iwata,” Peter Gorra, chief dealer in New York at BNP Paribas SA, said in a telephone interview. “Dollar-yen sold off about 50 points on that pretty quickly. It’s all about positioning.”
The yen rose less than 0.1% to 96.25 per dollar at 10:32 a.m. in New York after sliding 3.1% during the previous four days. Japan’s currency added 0.1% to 125.66 per euro. The euro gained 0.1% to $1.3060 after sliding to $1.2955 on March 8, the lowest since Dec. 11.
The pound dropped for a fifth day against the dollar as the Office for National Statistics said industrial production fell 1.2% in January. The median forecast in a Bloomberg News survey of economists was for an increase of 0.1%.
Pound Weakness
“Momentum is clearly against the pound and if anything that serves as an excuse to carry on, the market takes it,” said Derek Halpenny, European head of global-markets research at Bank of Tokyo-Mitsubishi UFJ in London. “The weak data backup renewed quantitative easing and it’s a clear recipe for further pound weakness.”
The pound declined 0.3% to $1.4865 after sliding to $1.4832, the lowest level since June 23, 2010. Sterling fell 0.5% to 87.88 pence per euro and weakened 0.8% to 1.4394 versus Australia’s dollar.
South Africa’s current-account shortfall was 6.5% of gross domestic product in the fourth quarter, versus a revised 6.8% in the previous three months, the central bank said. Economists surveyed by Bloomberg predicted it would shrink to 6.3%.
“It is a bit of a shocker for the rand,” said Mohammed Nalla, head of strategic research at Nedbank Group Ltd. in Johannesburg. “The worry is that the previous number was revised upwards. That’s a very large negative.”
The rand slid 0.5% to 9.1382 per dollar after weakening to 9.2122 per dollar, the lowest since April 2009.
Euro Trade
The euro fell earlier today as Citigroup Inc. said Italy may have to hold a new election to resolve a political deadlock created by an inconclusive vote on Feb. 24-25. The nation is scheduled to sell as much as 7.25 billion euros ($9.5 billion) of bonds tomorrow.
European Central Bank policy makers last week kept their benchmark interest-rate unchanged at 0.75% while lowering forecasts for economic growth and price increases. “In the short term, we in the euro area have, if anything, declining inflation risks,” Bundesbank President Jens Weidmann said in a statement today when the Frankfurt-based central bank released its 2012 annual report.
“You just had Weidmann saying he expects inflation to come down,” BNP’s Gorra said. “Coming from one of the biggest hawks out there, to me that’s a sign they can cut rates at some point. Again, another negative for the euro.”
Japan Politics
Japan’s Iwata may be confirmed even without backing from the Democratic Party of Japan if Prime Minister Shinzo Abe can secure the support of smaller opposition parties. The central bank can end deflation solely through buying government debt and doesn’t need to purchase riskier assets to meet its inflation target, Iwata said today in parliament.
The DPJ will endorse Haruhiko Kuroda as central bank governor and Hiroshi Nakaso as one of the deputy governors, policy chief Mitsuru Sakurai said today in Tokyo. Current governor Masaaki Shirakawa will step down on March 19.
The yen has tumbled 8% this year, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 3% and the euro gained 1.7%.
