The yen may strengthen to 95 per dollar by year-end as attention shifts to when the Fed will reduce its $85 billion in monthly bond purchases and Japan refrains from announcing new monetary stimulus, according to Anezka Christovova, a foreign- exchange strategist at Credit Suisse Group AG in London. Japan’s currency will end 2013 at 101 per dollar, according to the median estimate in a Bloomberg survey.
“A lot of people in the market are looking at dollar-yen as one of the key ways to play the risks associated with the debt negotiations, so certainly the hope for a deal should be affecting” Christovova said. “If it is indeed right that we get an early deal, the near-term reaction should be dollar-yen higher.”
Japan had a 161.5 billion-yen ($1.7 billion) surplus in its current account in August, the Ministry of Finance said in Tokyo. Economists surveyed by Bloomberg News estimated the excess would be 520 billion yen.
The yen has tumbled 9.8% this year, the worst performer of 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 2.2% and the euro rose 5.6%.
The rand climbed to almost a two-week high versus the dollar as stock-exchange data showed overseas investors boosted their holdings of the nation’s bonds by 592 million rand ($59.5 million) yesterday, a third day of inflows.
Foreign funds have bought 1.2 billion rand of the nation’s debt since a partial shutdown of the U.S. government began last week. South Africa depends on portfolio inflows to plug its current-account deficit and support the rand.
“One reason for the rand’s resilience remains the strong portfolio inflows,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, wrote in a note to clients. Foreign bond and equity purchases since the start of the shutdown are “equivalent to a monthly rate of around 10 billion rand, which is good but not brilliant” he said.
The rand jumped 0.6% to 9.9459 per dollar after appreciating to 9.9164, the strongest level since Sept. 25.
The South Korean won weakened for a second day on speculation its advance to an eight-month high spurred selling.
“The won entered a period of correction after a good run,” said Kim Dong Young, a currency dealer at Industrial Bank of Korea in Seoul. “We don’t expect a big sell-off as demand for the won will emerge, given that the appreciation trend is still in place.”
The currency fell 0.2% to close at 1,073.75 per dollar in Seoul.
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