Yen climbs on safety demand as Cyprus banks reopen

Capital Movements

The European Commission said in a statement the control on capital movements must remain “proportionate” and be lifted as soon as possible.

“Euro has come down quite a bit this week,” Robert Lynch, a New York-based currency strategist at HSBC Holdings Plc, said in a telephone interview. “That contagion element has been problematic for the euro in the past and had contributed to the euros’ weakness yesterday, and you don’t have that today. With the more stable backdrop, I think that’s probably contributing to euro’s performance today.”

The Federal Labor Agency said the number of people out of work in Germany increased a seasonally adjusted 13,000 to 2.94 million. Economists had predicted a decline of 2,000, according to the median of 24 estimates in a Bloomberg News survey.

The euro has dropped 0.4% in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar has risen 2.9%, while the yen dropped 7%, the worst performer.

BOJ Governor Haruhiko Kuroda told parliament’s upper house today that policy makers need to lower yields on longer-maturity government bonds and that purchases of risk assets may also be needed. The comments echoed lower-house testimony on March 26, when Kuroda pledged to buy more government bonds to reach the BOJ’s inflation goal. The central bank will discuss policy on April 3-4.

“Kuroda’s been talking up more aggressive easing and stamping out deflation,” said Janu Chan, a Sydney-based economist at St. George Bank Ltd. “If the governor does what’s expected, we’ll probably see limited reaction. There’s probably more risk that the yen strengthens than weakens.”

Bloomberg News

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