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03/10/10

Japanese yen gains broadly, debt woes hurt euro (M)

The safe-haven...
Category: Forex News
Posted by: aline
The safe-haven yen gained broadly on Tuesday amid Japanese repatriation flows, while the euro declined on concerns peripheral euro zone economies could face debt problems similar to those of Greece. Appetite for risk had been boosted by Friday's better-than- expected U.S. employment report, pushing the yen down to two-week lows versus the euro and the dollar. But comments from Fitch Ratings on Portugal's austerity measures on Tuesday prompted a comeback for the yen and triggered further selling in the European currency. The dollar was supported after China said it was committed to buying U.S. Treasuries.

Traders said Japanese exporters were in the market buying yen fairly actively, with further demand for the Japanese currency likely in the run-up to fiscal year-end on March 31. Further yen gains could however be limited by speculation that the Bank of Japan may take additional steps to ease monetary policy. The BOJ is in the spotlight after the Nikkei newspaper reported on Friday that the central bank was examining easing again and may decide on such a move when it meets on March 16-17. In early afternoon New York trade, the dollar was trading down 0.4 percent at 89.92 yen.

The dollar index, a non-traded calculation of the dollar's performance against a basket of currencies, was up 0.2 percent at 80.543. China, the world's biggest holder of foreign exchange reserves, renewed its commitment to the U.S. Treasury market on Tuesday but said it would be wary of substantially boosting its gold holdings. Greek Finance Minister George Papaconstantinou said on Tuesday in Washington the country was taking necessary steps to get its budgets under control but said the issue was also a European one. Greece has been a drag on the euro in 2010, which has lost 5 percent against the dollar so far this year and 8.1 percent against the yen.