BL: Yen, Dollar Fall as Return of Trichet Spurs Speculation Over Greece Plan
Yen, Dollar Decline on Speculation Europe Will Assist Greece
By Yoshiaki Nohara and Ron Harui
Feb. 9 (Bloomberg) -- The yen and dollar declined on speculation European officials will agree to assist Greece in tackling its fiscal deficit, reducing demand for the two currencies as a refuge.
The euro rallied from near an 11-month low versus the yen as European Central Bank President Jean-Claude Trichet left a central bankers’ meeting in Sydney a day early, sparking speculation policy makers will help Greece address its budget deficit. The yen declined for a third day against the dollar on speculation that Japanese companies sold the currency.
“Investors may get excited today over ECB President Trichet leaving a central bankers conference a day early,” said David Forrester, a currency economist at Barclays Capital in Singapore. “Investors may begin to think that a policy measure directed at Greece’s fiscal situation is potentially in the works. The market appears to be waiting on further news before deciding to buy the euro back or sell it further.”
The euro rose to 122.27 yen as of 12:39 p.m. in Tokyo from 121.81 yen in New York yesterday. It touched 120.71 yen on Feb. 5, the weakest level since Feb. 24. Japan’s currency declined to 89.43 per dollar from 89.26. The dollar fell to $1.3674 per euro from $1.3649.
Trichet will today depart a symposium organized by the Reserve Bank of Australia to mark its 50th anniversary, in order to attend a gathering of European Union leaders, ECB spokeswoman Regina Schueller said.
Greece’s Budget Woes
The budget woes of Greece threaten to overshadow the Feb. 11 summit, called to lay the groundwork for a 10-year economic program to strengthen the EU’s competitiveness in the face of an aging population and challenges from China.
The yen weakened against all of its 16 major counterparts on the prospect that Japan’s importers are buying foreign currencies to settle their bills.
“Importers and those who have long positions are selling the yen,” said Hideaki Inoue, chief manager of foreign- exchange and financial products trading at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. “This may be a short-lived position adjustment.” A long position is a bet an asset will rise.
The euro also strengthened against the greenback as its 14-day relative strength index versus the dollar was at 24.7 today, below the 30 threshold that indicates the currency may have fallen too fast and is poised to gain.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
Last Updated: February 8, 2010 22:51 EST
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