Yen Gains Versus Peers as BOJ"s Kuroda Gives No New Policy Hints

The yen gained against all its 16

major peers as Bank of Japan (8301) Governor Haruhiko Kuroda reiterated

policy easing options, damping expectations for novel measures

to be unveiled as early as next week.

Kuroda spoke to upper house lawmakers today after telling
Japan’s lower house earlier this week he aimed to achieve a 2

percent annual inflation goal in two years. The euro traded 0.3

percent from a four-month low versus the dollar as traders

speculated future European bailouts could include the kind of

bank deposit levies imposed on Cyprus.

“Kuroda’s been talking up more aggressive easing and

stamping out deflation,” said Janu Chan, a Sydney-based

economist at St. George Bank Ltd. “If the governor does what’s

expected, we’ll probably see limited reaction in the currency.

There’s probably more risk that the yen strengthens than

weakens.”

The yen gained 0.4 percent to 94.08 versus the dollar as of

11:47 a.m. in Tokyo from yesterday. It rose 0.3 percent to

120.31 against the euro. The 17-nation currency was little

changed at $1.2788, after yesterday touching $1.2751, the lowest

since Nov. 21.

For the week, the yen is set for a 0.4 percent gain against

the greenback, and a 2 percent gain against the euro. The euro

has fallen 1.5 percent against the dollar. Tomorrow is a holiday

in most of Europe, the U.S., and much of Asia.

Kuroda Testimony

Kuroda told lawmakers today that policy makers need to

lower the longer end of the so-called yield curve, and that

purchases of risk assets may also be needed. The comments echoed

lower house testimony on March 26, when Kuroda pledged to buy

more government bonds to help achieve the BOJ’s inflation goal.

The central bank will meet on policy on April 3-4.

Expectations for additional BOJ stimulus have driven the

yen down nearly 17 percent in the past six months, the biggest

decline among 10 developed-nation currencies tracked by the

Bloomberg Correlation-Weighted Indexes. The U.S. dollar has

risen 2.8 percent, while the euro has gained 2.1 percent.

Over the past month, the euro has fallen 1.8 percent, the

biggest drop, according to the gauges. The yen has declined 1.3

percent and the dollar added 0.5 percent.

Cypriot banks will open their doors to customers today for

the first time in almost two weeks, with new rules curbing

access to cash. They’ve been closed since March 16, when the

European Union presented a plan to force losses on all

depositors in exchange for a bailout. A subsequent agreement

shuts Cyprus Popular Bank Pcl (CPB), the nation’s No. 2 lender, and

imposes larger losses on uninsured depositors.

Yields Rise

Borrowing costs rose in Spain, Portugal and Italy

yesterday, with the Italian 10-year yield at its highest

relative to German bunds this year.

“These are the countries where the risk of deposit flight

in the wake of the Cypriot crisis ‘resolution’ package is seen

to run highest,” analysts at National Australia Bank Ltd., led

by Sydney-based global head of research Peter Jolly, wrote in a

research note. “Speculation is already mounting over who is the

next candidate to whom the Cyprus ‘template’ might be applied,”

with Slovenia and Malta among the leading candidates, they

wrote.

Italy is still without a government, a month after

inconclusive elections. Democratic Party leader Pier Luigi Bersani said there was no chance of a broad coalition to end the

political deadlock following nearly a week of talks with rival

parties. He will report to President Giorgio Napolitano today

with the results of his negotiations.

The euro has fallen 2.1 percent against the dollar this

month and 3.1 percent in the first quarter of 2013. The Mexican

peso is the biggest gainer against the dollar since the end of

2012, rising 4.1 percent.

Revised figures from the U.S. Commerce Department today may

show the economy expanded at a 0.5 percent annual pace in the

fourth quarter, faster than the government’s previous estimate

of 0.1 percent growth, according to the median forecast in a

Bloomberg News survey.

To contact the reporters on this story:

Kevin Buckland in Tokyo at

kbuckland1@bloomberg.net;

Kristine Aquino in Singapore at

kaquino1@bloomberg.net

To contact the editor responsible for this story:

Rocky Swift at

rswift5@bloomberg.net

Yen Gains Versus Peers as BOJ"s Kuroda Gives No New Policy Hints