The yen weakened as stocks advanced after an adviser to Japan’s Prime Minister Shinzo Abe said the nation’s central bank can add to its unprecedented stimulus if necessary to support an economic revival.
Japan’s currency weakened against almost all of its 16 major peers as demand for the safest assets waned. South Africa’s rand tumbled to a four-year low versus the dollar after data showed the economy slowed more than analysts estimated in the first quarter. The U.S. currency remained higher against the yen and was little changed against the euro after a private report showed U.S. home prices rose in the 12 months through March by the most in seven years.
“You have a market that’s still biased to sell yen,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a telephone interview. “Even though we’ve seen profit-taking, there’s still a lot of interest to buy dollar-yen on dips, especially for players that might’ve missed the initial move above 100.”
The yen depreciated 1.1% to 102.07 per dollar at 9:09 a.m. New York time. It reached 103.74 on May 22, the weakest level since October 2008. The Japanese currency slid 1.1% to 131.98 per euro. The dollar was little changed at $1.2930 per euro. Markets in the U.S. and U.K. were closed yesterday for public holidays.
The MSCI Asia Pacific Index rose 0.3% and the Stoxx Europe 600 Index of shares advanced 1.32%.
The yen slid for a seventh-straight month versus the dollar in April after the Bank of Japan pledged to double bond buying in an attempt to secure 2% inflation and drag the world’s third-biggest economy out of 15 years of deflation.
While board member Ryuzo Miyao said in Tokyo today that the central bank has taken all necessary steps for now, Governor Haruhiko Kuroda “should continue to trust in his judgment and ease further” if needed, said Koichi Hamada, the retired Yale University professor advising Abe. The policy is working “as well or better than expected,” Hamada said.
The BOJ estimated that deposits it holds in custody for financial companies will rise to a record 72.4 trillion yen today. The current-account balance is a part of the monetary base, which the central bank plans to double in two years as it buys more than 7 trillion yen of government bonds every month.
“The underlying trend still remains for a weaker yen,” said Lee Hardman, a currency strategist at Bank of Tokyo- Mitsubishi UFJ Ltd. in London. “Investors will continue to become more convinced that Abe’s policies will work. The Japanese equity market has stabilized.”
The yen has fallen 12% this year, the biggest decline among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar is the biggest gainer, rising 5.1%, while the euro has climbed 2.9%.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against currencies of six major U.S. trading partners, was little changed at 83.743.
The Standard & Poor’s/Case-Shiller index of property values increased 10.9% from March 2012, the biggest 12-month gain since April 2006, after advancing 9.4% in February, a report showed in New York. The median estimated of economists surveyed by Bloomberg called for a 10.2% advance.
The Conference Board’s index of U.S. consumer sentiment climbed to 71.2 this month, the highest since November, from 68.1 in April, according to the median estimate of economists surveyed by Bloomberg before the report is issued at 10 a.m.
The Dollar Index climbed to the most since 2010 last week after Federal Reserve Chairman Ben S. Bernanke said the central bank may cut the pace of asset purchases if officials see indications of sustained growth.
“We expect the data in the U.S. to continue being stronger,” Athanasios Vamvakidis, head of Group-of-10 foreign- exchange strategy at Bank of America Merrill Lynch in London, said in an interview on Bloomberg Television’s “On the Move” with Francine Lacqua. “We expect the discussion of when the Fed will start tapering” to bolster the U.S. currency versus the yen and the euro, he said.
The dollar will advance to $1.25 per euro by year end, he predicted.
South Africa’s rand weakened versus all but one of its major counterparts tracked by Bloomberg.
The nation’s gross domestic product growth slowed to an annualized 0.9% from 2.1% in the fourth quarter, Statistics South Africa said in a report released in Johannesburg today. The median estimate of 15 economists in a Bloomberg survey was 1.6%.
The rand dropped 1% to 9.7169 per dollar and reached 9.7465, the weakest since March 2009.
Australia’s dollar climbed from near the lowest level since June 2012 versus its U.S. counterpart.
“We expect to see short-term strength this week,” Axel Rudolph, a technical analyst at Commerzbank AG in London, wrote in a note to clients. The relative-strength index for the currency “reinforces our bullish outlook,” he wrote.
The 14-day relative strength index for the Australian dollar versus the greenback was 29.9, up from 24.8 yesterday. It is still below the 30 level that traders view as a signal that an asset’s price has fallen too fast.
The Australian dollar advanced 0.5% to 96.83 U.S. cents. It fell to 95.94 on May 23, the lowest since June 1.
Investors should buy the currency at 96.40 U.S. cents and bet it will appreciate to 98 U.S. cents, Rudolph wrote.