Tokyo, Feb. 27 (Bloomberg) -- The yen may fall against the dollar for the first day in four on speculation by traders and investors Japan will sell its currency to stem a gain that may hinder its efforts for an export-led recovery. The Japanese currency has strengthened almost 15 percent in the past year, eroding profits for exporters such as Canon Inc., which earns three-quarters of revenue abroad, and slowing economic growth. Exports, which account for about 11 percent of Japan's economy, fell for a second month in January.
The yen held at 117.05 per dollar at 9:15 a.m. in Tokyo from late yesterday in New York. The Japanese currency traded at 126.39 against the euro from 126.43. ``We don't want to buy the yen close to 117 because of expectations Japan may sell,'' said Shohgo Nagaya, foreign exchange manager at Nomura Trust and Banking Co. ``People even speculated the Bank of Japan has come in to sell close to that level.'' The yen may fall to 117.60 to the dollar today, he said. Asked about the speculation yesterday, a Ministry of Finance official declined to comment. The Ministry of Finance had the central bank sell about 700 billion yen ($5.97 billion) last month to stem the currency's rise, the first such action since it sold an estimated $33 billion of yen between May and June, which was a quarterly record. Cooperation Any gain in the dollar may be limited after Germany's Die Zeit newspaper reported yesterday the United Nations chief weapons inspector Hans Blix said that ``it's not even clear whether the Iraqis really want to cooperate'' with inspectors, heightening speculation the U.S. will attack Iraq as early as next month. Concerns about U.S.-led attack have sent crude oil prices to a 12-year high yesterday. Prices have climbed 42 percent over the past three months. The decline in consumer confidence this month wasn't a surprise because higher gasoline prices brought on by events in Iraq are hurting consumer incomes, Federal Reserve Chairman Alan Greenspan said. An industry report showed this week that U.S. consumer confidence fell to the lowest in nine years this month. The threat of a war has made some international investors more cautious, prompting them to cut back on the money they invest abroad. That has hurt the dollar because the U.S. counts on receiving about $1.4 billion in foreign investment a day to offset its deficit in the current account, a measure of trade.
Discouraging
Demand for the U.S. currency may also fall after U.S. stocks fell yesterday, sending both the Standard & Poor's 500 Index and the Dow Jones Industrial Average down 1.3 percent. Futures on the S&P 500 Index fell 1.1 points, suggesting stocks may fall again today. ``The threat of war, rising oil prices and falling U.S. stocks are all discouraging for the dollar,'' said Minoru Shioiri, senior manager of treasury and foreign exchange division at Mitsubishi Securities Co. The dollar may fall to 117.00 yen today, he said. The yen may also fall after the Associated Press said the U.S. learned yesterday that Japan's neighbor North Korea reactivated a reactor at its main nuclear complex, citing unidentified U.S. government officials. North Korea withdrew from a nuclear arms control agreement in January. It also threatened to abandon the armistice that ended the 1950-53 Korean War. In other trading the British pound was little changed at $1.5840. The U.S. dollar traded at 1.3545 Swiss francs and at $1.0799 per euro. //www.quote.bloomberg.com