Yen declines as Aso says Japan avoided G-20 censure

Aso Comments

Japan explained its easing is for price stability, Aso told reporters in Washington. Central bank Governor Haruhiko Kuroda earlier said nations understand Japan’s stance, indicating that he expects no censure.

“The comments from Finance Minister Aso that the plans are seen as unopposed clearly was a trigger point” for selling the yen, said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. “A moderate weakening is still on the cards. It looks like we’re going to grind toward 100” yen per dollar, he said.

The G-20 will affirm a commitment to avoid competitive devaluation without singling out any nation, according to a draft statement seen by a Bloomberg BNA reporter.

‘Dud’ Meeting

“This G-20 meeting is more of a dud than usual and it’s not going to stand in the way of a lower yen,” said Todd Elmer, a foreign-exchange strategist at Citigroup Inc. in Singapore. There had been expectations “we could see some stronger international opposition to yen weakening, but this really puts those concerns to rest.”

There’s an 85% probability the yen will weaken to 100 per dollar in the next month, according to options data compiled by Bloomberg.

Options traders are the most bullish on the dollar against its Japanese counterpart in almost two months.

The premium for three-month options granting the right to buy the greenback versus the Japanese currency relative to those allowing for sales was as much 0.94 percentage point today, the most since Feb. 18, according to 25-delta risk reversals.

“From a tactical basis we can understand being dollar bullish at the moment,” David Bloom, global head of currency strategy at HSBC Holdings Plc in London, said in an interview on Bloomberg Television’s “On the Move” with Francine Lacqua and David Tweed. Still, the BOJ measures are not going to work and the dollar “is going to slide back again. At the moment I’m considered the lunatic fringe,” he said.

Bloomberg News

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