Yen Strengthens on Concern G-20 May Tighten Investment Rules
Sept. 25 (Bloomberg) -- The yen rose, heading for a weeklyadvance against the euro, on speculation Japanese exportersrepatriated profits before the fiscal first half ends this month.
The dollar pared a weekly gain against the euro afterReuters said a draft communiqué by Group of 20 leaders pledgedto maintain measures to bolster the global economy until arecovery is secured. The pound was set for a third weekly lossagainst the euro after the Newcastle Journal reported that Bankof England Governor Mervyn King said the currency’s drop was“very helpful” in rebalancing the economy.
“Yen repatriation by Japanese firms is likely to continuetoday and next week,” said Masanobu Ishikawa, general managerof foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’slargest currency broker. “The bias is for the yen to rise.”
Japan’s currency climbed to 133.18 yen per euro as of 6:26a.m. in London from 133.86 yen in New York yesterday, afterearlier reaching 132.53 yen, the highest level since Sept. 16.It rose to 90.69 yen per dollar from 91.27 yen.
The dollar was at $1.4683 per euro from $1.4666 yesterdayin New York and from $1.4712 a week earlier. The greenback isset for a 0.2 percent weekly gain against Europe’s singlecurrency, the first advance since the five days ending Sept. 4.
The G-20 also agreed to take steps to restrict excesses inthe financial industry and cooperate on increasing capitalstandards for banks, Reuters said. The G-20 kicked off a two-daymeeting yesterday in Pittsburgh.
Profit Repatriation
Japan’s currency is set for a weekly advance versus 13 ofits 16 major counterparts on prospects the nation’s exporterswill take advantage of an April 1 rule change that waives taxeson repatriated profits. Under previous laws, companies had topay a combined 40 percent tax on overseas earnings. The firsthalf of Japan’s fiscal year ends Sept. 30.
Japanese exports fell 36 percent in August from a yearearlier, the Finance Ministry said yesterday, an 11th-straightdecline. The drop was exacerbated by the yen’s 17 percent surgeagainst the dollar in the past year, making Japanese goods moreexpensive abroad and lowering the value of repatriated earnings.
“We’re affected by exchange rates, there’s no doubt aboutit,” said Paul Nolasco, a Tokyo-based spokesman at Toyota,which based its earnings estimates on the assumption that theyen will trade at an average of 92 to the dollar in the next sixmonths. The automaker forecasts a 450 billion yen ($5 billion)net loss for the year ending March 2010.
Large manufacturers expected the yen to trade at an averageof 94.85 per dollar in the 12 months to March 2010, according tothe Bank of Japan’s quarterly Tankan survey released July 1.
‘Star’ Pound
The pound reached the lowest level in more than five monthsagainst the euro on King’s comments.
“The pound was the star of all the currencies that felltoday,” said Takashi Kudo, director of foreign-exchange salesin Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph &Telephone Corp.
The pound declined to as low as $1.5918 today, the weakestsince June 8, from $1.6059 yesterday in New York. The U.K.currency dropped to 91.93 pence per euro, reaching the lowestlevel since April 1.
To contact the reporters on this story:Yasuhiko Seki in Tokyo at yseki5@bloomberg.net;Ron Harui in Singapore at rharui@bloomerg.net.
Last Updated: September 25, 2009 02:01 EDTSource: Bloomberg
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