The yen touched the weakest level since March against the dollar on bets that Shinzo Abe’s Liberal Democratic Party will win Japanese elections this weekend and push the central bank to expand monetary easing.
The Japanese currency headed for a weekly loss versus all of its 16 major counterparts as the Bank of Japan’s Tankan survey showed large manufacturers were the most pessimistic in almost three years. The euro traded near a one-week high after the currency bloc’s finance ministers approved 49.1 billion-euro ($64.2 billion) of rescue payments to Greece yesterday.
“The extent of the dollar-yen rally is quite striking,” said Sean Callow, a Sydney-based senior currency strategist at Westpac Banking Corp. (WBC) “It’s reasonable to think that there would be some impact on BOJ policy from a change of leadership. If Abe wins a comfortable mandate, he will certainly be keen to appoint somebody who is willing to take more aggressive steps” he said referring to the position of central bank governor. Incumbent Masaaki Shirakawa’s five-year term ends in April.
The yen touched 83.68 per dollar, the lowest level since March 21, before trading little changed at 83.66 at 9:12 a.m. in Tokyo from the close yesterday. It fetched 109.38 per euro from 109.39, after yesterday weakening to 109.54, the least since April 4. The Japanese currency has lost 1.4 percent versus the greenback this week, while dropping 2.5 percent against the euro.
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