New York, Sept. 20 -- The yen plunged to a three- year low against the euro and fell against the dollar after Japan for the first time failed to raise as much money as it intended in a bond sale. About 97 percent of the country's sovereign debt is held in Japan, with the Bank of Japan typically buying about two-fifths of new securities monthly. Much of the rest is purchased by investors in Japan, known as a nation of savers. ``This is a slap in the face and we're seeing a protest kind of reaction'' from Japanese investors, said Stephen Gallagher, chief U.S. economist at Societe Generale. The yen is falling because government officials have been ``signaling radical policy change and they're leaving private investors in the dark.''
The yen slumped to 121.18 per euro, a level last seen in August 1999, from 119.78 late yesterday. The Japanese currency traded at 120.78 yen at 8 a.m. in New York. Against the dollar, it lost 1.6 percent to 123.29 per dollar, its weakest level since June 21, from 121.32. Japan's sale of 1.8 trillion yen ($14.7 billion) of 10-year bonds drew bids worth 88 percent of the offering. It was the first time the Ministry of Finance has failed to draw enough bids since it began competitive price auctions for 10-year bonds in 1989, a ministry official said.
The auction results added to concern a central bank plan announced Wednesday to buy about a third of the more than $200 billion in stocks held by Japanese banks doesn't go far enough to help the debt-laden financial institutions. //quote.bloomberg.com