London, April 1 (Bloomberg) -- The yen, which yesterday had its biggest gain against the dollar since August, may fall after Japanese Finance Minister Masajuro Shiokawa said his nation is prepared to sell its currency to stem ``speculative'' movements. Japan's currency has been ``volatile'' since yesterday, and ``speculative moves are unwelcome,'' Shiokawa said. Japan sold about 1.2 trillion yen ($10.2 billon) in March, a Ministry of Finance official said yesterday, to stem gains in the currency that threaten the country's export-led recovery, analysts said. The yen was little changed at 118.05 yen per dollar at 10:40 a.m. in London. It has risen more than 12 percent against the U.S. currency in the past 12 months. The dollar was trading at $1.0898 against the euro from $1.0902. It earlier reached $1.0933, the weakest since March 13. ``The Bank of Japan is determined to prevent further strengthening of the yen,'' said Philippe Ithurbide, global head of foreign exchange and fixed-income research at Societe Generale in Paris. At the same time, ``intervention can only interrupt and slow'' the yen's rise, because investor concern about the war in Iraq keeps the dollar weak, he said. The Bank of Japan sold yen several times in the month to March 27 to counter speculative movements, the official said. The central bank, which has sold about 2.4 trillion yen so far this year, sells and buys the currency at the Finance Ministry's request.
`Alarm Bells'
Yesterday's rise in the yen brought it to a level that the Ministry of Finance ``would usually worry about and at a speed that surely must ring alarm bells,'' said Marshall Gittler, a currency strategist in Tokyo with Deutsche Bank AG, the third- largest trader in the $1.2-trillion-a-day currency market. ``The MoF will still be in the market'' selling the yen, which may weaken to 122.10 against the dollar in coming weeks, he said. Exporters such as Canon Inc., Japan's biggest office equipment maker, earn three quarters of their revenue abroad. Exports made up about half the country's 0.5 percent growth in the fourth quarter. The U.S. is the biggest market for its goods. Some analysts said the Finance Ministry will be less inclined to sell its currency after Japan's financial year finished yesterday. A weaker currency means Japanese companies can convert profit earned abroad into yen at a more favorable rate before year- end.
Confidence
The recent yen sales ``were designed to keep the yen at a certain level before the end of the fiscal year,'' said Hans Redeker, head of foreign-exchange strategy at BNP Paribas. The question is ``whether the Finance Ministry will continue now.'' Investors are betting it won't he said. Demand for the yen also waned after the Bank of Japan's Tankan report showed confidence among Japan's large manufacturers fell for first time in five quarters, suggesting the nation's recovery from its third recession in a decade is stalling. The Tankan index of sentiment at large manufacturers, the most closely watched gauge of confidence, fell 1 point to minus 10 in March. A gain to minus 8 was the median forecast of 40 economists in a Bloomberg News survey. A negative number means pessimists outnumber optimists. Large manufacturers in the survey said they expected the yen to average 118.03 per dollar this fiscal year. Any gain in the dollar against the yen may be limited by concern the war in Iraq will drag on an already-slowing U.S. economy. Coalition ground forces are battling Iraq's best-equipped troops about 50 miles (80 kilometers) south of Baghdad. Warplanes bombed Iraqi positions across the country, military officials said. U.S. manufacturing probably contracted in March for the first time in five months, economists polled by Bloomberg News expect a report at 4 p.m. London time to show. The Institute for Supply Management's factory index is expected to decline to 49 from 50.5 in February, the poll showed. Readings below 50 signal deteriorating business conditions. The U.S. jobless rate probably rose to 5.9 percent in March from 5.8 percent in February, economists expect a government report Friday to show. //www.quote.bloomberg.com