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Yen Slides Past 102 as G-7 Tolerates Drop; Japan Stocks Advance (Bloomberg)

Posted by Akhilesh Ganti on May 12, 2013 8:58:00 PM

(from Bloomberg)

By Pratish Narayanan and Yoshiaki Nohara

May 13 (Bloomberg) -- The yen weakened past 102 per dollar for the first time since October 2008 as Group of Seven finance chiefs indicated they will tolerate the currency’s decline. Japanese stocks led Asian shares higher, while gold fell. The yen dropped 0.2 percent to 101.87 a dollar at 9:51 a.m. in Tokyo after losing 2.6 percent last week, the most in five weeks. It fell to 102.15 earlier today. Japan’s Topix Index climbed 1.5 percent, while the MSCI Asia Pacific Index rose 0.5 percent. Standard & Poor’s 500 Index futures lost 0.4 percent after the measure closed at a record high last week. Gold dropped 0.8 percent and the South Korean won slid 0.8 percent.

While signaling acceptance of the yen’s decline, G-7 policy makers said they examined Japan’s strategy and that they will monitor its impact on currencies. Data on Chinese industrial production and Indian consumer prices are due today. “Markets are prepared to back Japanese authorities’ attempt to reflate in terms of a weaker yen and expanding monetary base,” said Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “The export sector from Japan will be an obvious beneficiary of that.”

Policy makers reaffirmed their February commitment to “not target exchange rates” at a meeting in Aylesbury, near London, U.K. Chancellor of the Exchequer George Osborne told reporters May 11. About three stocks rose for every two that fell in the MSCI Asia Pacific Index, as the Topix headed for its highest close since Sept. 1, 2008. Toyota Motor Corp., the world’s biggest carmaker, climbed 4.1 percent in Tokyo.

The yen has slumped as a leadership change in the Bank of Japan initiated unprecedented monetary easing, aiming to reach a 2 percent inflation target. The yen has plunged 13 percent this year, the worst-performance among the 10 developed-market currencies tracked by the Bloomberg Correlation Weighted Indexes. The Australian and New Zealand dollars weakened at least 0.3 percent against the greenback, while the won dropped for a third day, falling 0.8 percent to 1,114.80 per dollar.


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