13 December 2001, 09:51 Forex - Yen weaker in midmorning Tokyo, retesting downside; euro/yen leads
TOKYO (AFX-ASIA) - The yen was weaker in midmorning, testing the
downside after yesterday's short respite following a slightly
better-than-expected Tankan survey, with the euro leading the way,
dealers said.
"The yen is very weak. People are going into the European
currencies such as the Swiss franc, sterling and the euro," Dresdner
Bank Forex manager Marito Ueda said.
"The yen will depreciate now that it has broken the crucial barrier
of 113 (against the euro) and go down to 115-116, and against the
dollar possibly up to 130 or 135.
"I can't find any reason to buy the yen," Ueda said.
BankOne foreign exchange analyst Masahiro Ishikawa said the yen
looks certain to weaken against the dollar, perhaps more aggressively
than the market had expected as year-end factors fail to have a strong
influence.
"I'm looking for more downside on the yen. There are too many
people who are talking about large short-yen positions. The dollar
could break the year high of 126.84 yen sooner than the market expects
-- tonight or tomorrow," he said.
"Once we see stop-losses triggered around 126.70 yen, it can easily
see 127-128 yen levels," he added.
Ishikawa said the yen will continue to weaken even without the help
of the Bank of Japan, which is unlikely to resort to buying foreign
bonds, as has been speculated.
"If the BoJ buys foreign bonds it should push the yen lower but the
BoJ is more likely to buy yen-denominated CPs or other securities.
Foreign bonds would not be its first choice," he said.
Bank of Japan governor Masaru Hayami said this morning that he
believes it is very difficult for the central bank to buy foreign bonds
through the financial markets because of legal prohibitions.
"I know the issue of the BoJ buying foreign bonds is being
discussed in the media but I think such a purchase through the
financial markets is very difficult unless legislation is amended to
allow this," Hayami said.
"Foreign-bond purchases are being talked of as a way to supply yen
into the financial system but we must study how strongly there is a
need for this," he told a Lower House budget parliamentary economic and
fiscal policy committee.
However, Hayami added that he cannot deny the possibility that
Japan will fall into a deflationary spiral.
"The BoJ needs to continue its current monetary easing policy to
avoid entering a deflationary spiral, together with the government's
efforts to draw on the positive side of structural reforms," he said.
Meanwhile, reports in several domestic newspapers that the
government will issue a target for GDP growth next fiscal year of a
negative 0.1 pct had little impact on the market on the view that even
that figure is very optimistic.
"I think the government probably has restrained itself. I don't
think they can say there is more downside," BankOne's Ishikawa said,
noting that this would affect revenue calculations used to justify
budget projections.
Similarly, this morning's current account data, which showed a
second consecutive rise in Japan's surplus, was of limited interest.
"If you compare it with the figures of a few years ago, then it is
not so good. We need to move away from gaining (income) from exports,
anyway," Ishikawa said.
© 1999-2024 Forex EuroClub
All rights reserved