TOKYO: The yen remained weaker against the dollar as the extra yield for two-year U.S. Treasuries over Japan’s government notes widened to the most in almost one month, dimming the appeal of the Asian nation’s debt.
The dollar and the Japanese currency traded near the lowest in at least three weeks against the euro as a rally in global equities reduced demand for haven currencies. The Bank of Japan starts a two-day meeting today. Nine of 22 analysts surveyed by Bloomberg News said the central bank may scrap the yield floor on its purchases of longer-term debt as early as tomorrow.
“The dollar-yen is becoming responsive to yield differentials,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency-margin company. “Because stocks are being bought, risk-on sentiment continues to prevail in markets, spurring selling of yen and dollar.”
The yen traded at 78.65 per dollar as of 8:10 a.m. in Tokyo from 78.61 at the close in New York, when it fell 0.5 percent. The Japanese currency was at 97.45 per euro from 97.46 yesterday, when it touched 97.82, the weakest since July 12. The 17-nation currency bought $1.2390 from $1.2399. It reached $1.2444 on Aug. 6, the highest since July 5.
The extra yield investors demand to hold two-year Treasuries over similar Japanese government notes rose to 16.4 basis points, or 0.164 percentage point yesterday, the most since July 11.
The Standard & Poor’s 500 Index of U.S. shares gained 0.5 percent yesterday, while the MSCI World Index added 0.7 percent.
Japan’s Ministry of Finance will report the nation’s current account balance in June at 8:50 a.m. Tokyo time. (Bloomberg/msw)
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