Tags: yen | accord | inflation | oil

Yen Depreciates to Six-Month Low on Iran Accord

Monday, 25 Nov 2013 10:06 AM

The yen slid to the weakest level in almost six months versus the dollar as demand for the safety of the currency waned after an accord was struck to set limits on Iran’s nuclear program.

Japan’s currency depreciated to a four-year low against the euro before a report this week economists said will show inflation accelerated in October. Thailand’s baht fell to an 11-week low.

The nuclear deal “is helping dollar-yen and helping risk,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a phone interview. “U.S. data has had a better tone lately. That’s reviving the December-tapering idea.”

The yen fell 0.5 percent to 101.77 per dollar at 9:22 a.m. New York time after reaching 101.92, the weakest since May 29. It declined 0.1 percent to 137.40 per euro after touching 137.99, the most since October 2009. The dollar added 0.4 percent to $1.3501 against Europe’s shared currency.

The Bloomberg U.S. Dollar Index, which tracks the currency against 10 major counterparts, rose 0.3 percent to 1,021.75.

Baht, Rupee

Anti-government protests in Thailand spread to military bases, government offices and television stations today after more than 100,000 people joined rallies yesterday against Prime Minister Yingluck Shinawatra. Global funds pulled a net $2.1 billion from Thai bonds and equities this month through Nov. 22, official data show.

“Investors want to stay away from Thailand amid concern the protests will intensify or lead to violence,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Bank Ltd. in Tokyo. “The political concern encouraged investors to take some money out from Thailand.”

The baht fell 0.6 percent to 31.99 per dollar after touching 32.02, the weakest level since Sept. 11.

India’s rupee rose the second-most among emerging-market currencies on optimism a drop in oil costs after Iran’s nuclear pact will help shrink the South Asian nation’s current-account deficit.

‘Positive Impact’

Iran agreed to curtail its nuclear activities and in return won an easing of “certain sanctions” on oil, auto parts, gold and precious metals. The deal, which is reversible, was announced yesterday after five days of talks in Geneva.

“The Iran deal is a huge boost as our oil costs will come down,” said Vikas Babu, a trader at Andhra Bank in Mumbai. “The swap-window extension will have a limited, but positive impact on the exchange rate.”

The rupee gained for a second day, adding 0.6 percent to 62.4950 per dollar.

Japan’s statistics bureau will say on Nov. 29 the nation’s consumer prices excluding fresh food rose 0.9 percent last month from a year earlier, according to the median estimate of economists surveyed by Bloomberg News. Deflation is coming to an end and the nation’s economy is recovering as expected, Mitsuhiro Furusawa, vice minister of finance for international affairs said today.

Inflation Target

The Bank of Japan said in April it wanted to achieve 2 percent inflation in about two years. Governor Haruhiko Kuroda said today the bank’s target could be hit sometime late in the fiscal year through 2014 or early in the 2015 period.

“This week, we will probably see another tick up in the CPI data out of Japan,” Steven Saywell, global head of foreign-exchange strategy at BNP Paribas SA in London, said in an interview on Bloomberg Television’s “On the Move” with Manus Cranny. “The BOJ is very much focused on reaching the inflation target and what that means is that the yen continues to weaken.”

The yen lost 13 percent this year, the biggest decline among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 4.1 percent and the euro advanced 6.8 percent.

The shared European currency declined after policymaker Ardo Hansson said the Frankfurt-based European Central Bank is technically prepared to make its deposit rate negative.

“The options on rate cuts are still not fully exhausted and there are all kinds of other measures that are still on the table,” Hansson, who also heads Estonia’s central bank, said in an interview in Tallinn on Nov. 22.

Minutes of the Fed’s Oct. 29-30 meeting showed policymakers “generally expected” improvement in employment data that would “warrant trimming the pace of purchases in coming months.” The central bank buys $85 billion of Treasurys and mortgage-backed securities a month. The Fed next meets on Dec. 17-18.

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The yen slid to the weakest level in almost six months versus the dollar as demand for the safety of the currency waned after an accord was struck to set limits on Iran's nuclear program.
yen,accord,inflation,oil
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2013-06-25
Monday, 25 Nov 2013 10:06 AM
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