Yen weakens past 100 per dollar for first time in four years

The yen weakened beyond 100 per dollar for the first time in four years as the Bank of Japan’s deflation-fighting measures have the currency headed for its longest streak of monthly losses in almost two decades.

The dollar strengthened against most its major counterparts as a report showed U.S. claims for jobless benefits unexpectedly dropped to the lowest level in more than five years, adding to speculation the U.S. will curtail stimulus before central banks in Europe and Japan. The yen has dropped 4.2% since April 4 when BOJ Governor Haruhiko Kuroda outstripped economist forecasts by pledging to double monthly bond purchases and scoop up longer-term debt to reach a 2% annual inflation goal. The yen last traded at 100 on April 14, 2009.

“Signs of an improving U.S. job market have finally chipped away and made a difference against the yen,” Joe Manimbo, a market analyst at Western Union Business Solutions, a unit of Western Union Co., said in a phone interview from Washington. “We’ve seen these brightening prospects for the U.S. job market, a burst of news last week with the payrolls number, and again today with the weekly jobless claims tally.”

The yen dropped 1.5% to 100.55 per dollar as of 3:55 p.m. in New York after falling as much as 1.8%, the biggest drop since April 2009. It earlier appreciated as much as 0.4%. Japan’s currency fell 0.6% to 131.04 per euro. The dollar rose 0.9% versus the shared currency to $1.3033.

Treasury Auction

Japan’s currency extended gains and accelerated beyond 100 after a Treasury auction of $16 billion in 30-year bonds produced a lower-than-forecast yield.

“There has been a compelling argument that Japanese investing should be flooding into Treasuries,” said Eric Lascelles, the chief economist at Toronto-based Royal Bank of Canada Global Asset Management, which oversees $280 billion. “We’ve certainly seen a lot of front running of that effort, but there has been very little evidence of actual flows.”

While Kuroda’s April 4 announcement spurred speculation that domestic money managers would seek higher yields in the U.S. and other markets, Japanese investors cut holdings of overseas debt for a sixth-straight week in the period ended April 19, the longest streak since January 2010, Ministry of Finance data show. The MOF is scheduled to report the data, covering the past two weeks, this evening.

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