Yen, Dollar Advance on CIT Bankruptcy Concern, Jakarta Blasts
Friday, July 17, 2009
July 17 The yen and the dollar rose as speculation CIT Group Inc. will file for bankruptcy and blasts in Indonesia spurred demand for the currencies as a refuge.
The yen climbed more than 1 percent against the South African rand and the Swedish krona after New-York based CIT, the lender facing insolvency because it failed to obtain guarantees for its bonds, said it’s trying to secure financing. Indonesia’s rupiah fell the most in more than three weeks against the dollar after explosions tore through two hotels in Jakarta.
“In the short term, the Indonesian and CIT concerns will cause some knee-jerk risk aversion,” said Derek Halpenny, European head of global currency research at Bank of Tokyo- Mitsubishi UFJ Ltd. in London. “It’s an obvious first reaction.”
The yen strengthened to 131.99 per euro as of 9:07 a.m. in London, from 132.89 yesterday in New York, and appreciated to 93.70 per dollar, from 93.93. The U.S. currency rose to $1.4086 per euro, from $1.4148. The Indonesian rupiah weakened 0.5 percent to 10,175 per dollar, after dropping as much as 1 percent, the most since June 23.
Japan’s new top currency official said today the government would consider stepping into the foreign-exchange market only if abrupt yen moves hurt the economy.
“We’ll make judgments based on whether excessive movements in the currency market will adversely affect the economy,” Rintaro Tamaki, vice finance minister for international affairs, said in a group interview in Tokyo today.
The yen appreciated against all 16 most-actively traded currencies in the past month, while it’s weaker against the same group this year.
CIT Funds
Futures on the Standard & Poor’s 500 Index declined 0.2 percent, signaling U.S. stocks may open lower today. The Dollar Index, which the ICE uses to track the currency against those of six major U.S. trading partners such as the euro and the yen, rose 0.4 percent to 79.528.
CIT may need as much as $6 billion to avoid bankruptcy, CreditSights Inc. analysts said yesterday. CIT executives are seeking $2 billion to $3 billion in financing from the private sector, the Wall Street Journal reported, citing unidentified people familiar with the situation.
The yen gained for a second day against the euro and the British pound as bombs tore through the Ritz Carlton and the JW Marriott hotels in the Jakarta, killing at least nine people and injuring 42 others, police said.
Jakarta Explosions
The blasts in the two hotels were caused by “high explosives,” said Crisnanda, a spokesman for the police. A New Zealander was among those killed, the government in Wellington said.
“The explosions in Indonesia added to the buying of the yen on risk aversion,” said Takao Yahata, senior manager of foreign exchange and financial-products trading in Tokyo at Mitsubishi UFJ Trust and Banking Corp., a unit of Japan’s largest publicly traded lender by assets.
The yen also gained against the dollar on speculation Japanese exporters bought the currency to convert their foreign- exchange earnings before the three-day holiday. Monday is a national holiday in Japan.
“Yen buying by Japanese investors, including exporters, picked up as the yen fell back toward 94 per dollar and beyond,” said Kosei Fujita, a foreign currency dealer in Tokyo at SBI Liquidity Markets Co., a unit of SBI Holdings Inc.
Japanese companies forecast the yen would average 94.85 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey on corporate sentiment and business plans released on July 1.
Dollar Index
The Dollar Index also rose for the first time in three days after U.S. Treasury Secretary Timothy Geithner repeated that the Obama administration is committed to a “strong” dollar and curbing record budget deficits to achieve that objective.
Geithner said the dollar’s role in international finance places “special responsibilities” on the U.S. to sustain confidence in its financial system, according to an Internet chat with Les Echos newspaper yesterday.
“This was similar to well-timed comments by top U.S. officials to hold up confidence whenever U.S. stocks looked fragile,” Philip Wee, senior currency economist in Singapore at DBS Group Holdings Ltd., wrote in a research note today. “If so, U.S. officials may find further dollar weakness from here a threat to their efforts to dig the economy out of recession.”
The dollar and the yen still headed for their biggest weekly loss in two months against the euro as stocks advanced worldwide, reducing demand for the U.S. and Japanese currencies as a haven from the global recession.
Emerging Markets
“The currencies of emerging markets and resource-rich nations fare well against the dollar and the yen when stocks are on the rising trend, reflecting optimism about the economy,” said Yuji Kameoka, a strategist in Tokyo at Daiwa Institute of Research Ltd., a unit of Japan’s second-largest brokerage group. “The recent retreat in optimism and the re-emergence of risk- aversion may be a blip.”
The Nikkei 225 Stock Average rose 0.6 percent and the MSCI World Index climbed 0.3 percent, having gained 6.7 percent this week, the most since March.
The Canadian dollar appreciated the most of the 16 major currencies against the yen this week, climbing 5.4 percent to 83.80 yen. The Australian dollar advanced 4.1 percent over the past five days to 75 yen.
The yen climbed more than 1 percent against the South African rand and the Swedish krona after New-York based CIT, the lender facing insolvency because it failed to obtain guarantees for its bonds, said it’s trying to secure financing. Indonesia’s rupiah fell the most in more than three weeks against the dollar after explosions tore through two hotels in Jakarta.
“In the short term, the Indonesian and CIT concerns will cause some knee-jerk risk aversion,” said Derek Halpenny, European head of global currency research at Bank of Tokyo- Mitsubishi UFJ Ltd. in London. “It’s an obvious first reaction.”
The yen strengthened to 131.99 per euro as of 9:07 a.m. in London, from 132.89 yesterday in New York, and appreciated to 93.70 per dollar, from 93.93. The U.S. currency rose to $1.4086 per euro, from $1.4148. The Indonesian rupiah weakened 0.5 percent to 10,175 per dollar, after dropping as much as 1 percent, the most since June 23.
Japan’s new top currency official said today the government would consider stepping into the foreign-exchange market only if abrupt yen moves hurt the economy.
“We’ll make judgments based on whether excessive movements in the currency market will adversely affect the economy,” Rintaro Tamaki, vice finance minister for international affairs, said in a group interview in Tokyo today.
The yen appreciated against all 16 most-actively traded currencies in the past month, while it’s weaker against the same group this year.
CIT Funds
Futures on the Standard & Poor’s 500 Index declined 0.2 percent, signaling U.S. stocks may open lower today. The Dollar Index, which the ICE uses to track the currency against those of six major U.S. trading partners such as the euro and the yen, rose 0.4 percent to 79.528.
CIT may need as much as $6 billion to avoid bankruptcy, CreditSights Inc. analysts said yesterday. CIT executives are seeking $2 billion to $3 billion in financing from the private sector, the Wall Street Journal reported, citing unidentified people familiar with the situation.
The yen gained for a second day against the euro and the British pound as bombs tore through the Ritz Carlton and the JW Marriott hotels in the Jakarta, killing at least nine people and injuring 42 others, police said.
Jakarta Explosions
The blasts in the two hotels were caused by “high explosives,” said Crisnanda, a spokesman for the police. A New Zealander was among those killed, the government in Wellington said.
“The explosions in Indonesia added to the buying of the yen on risk aversion,” said Takao Yahata, senior manager of foreign exchange and financial-products trading in Tokyo at Mitsubishi UFJ Trust and Banking Corp., a unit of Japan’s largest publicly traded lender by assets.
The yen also gained against the dollar on speculation Japanese exporters bought the currency to convert their foreign- exchange earnings before the three-day holiday. Monday is a national holiday in Japan.
“Yen buying by Japanese investors, including exporters, picked up as the yen fell back toward 94 per dollar and beyond,” said Kosei Fujita, a foreign currency dealer in Tokyo at SBI Liquidity Markets Co., a unit of SBI Holdings Inc.
Japanese companies forecast the yen would average 94.85 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey on corporate sentiment and business plans released on July 1.
Dollar Index
The Dollar Index also rose for the first time in three days after U.S. Treasury Secretary Timothy Geithner repeated that the Obama administration is committed to a “strong” dollar and curbing record budget deficits to achieve that objective.
Geithner said the dollar’s role in international finance places “special responsibilities” on the U.S. to sustain confidence in its financial system, according to an Internet chat with Les Echos newspaper yesterday.
“This was similar to well-timed comments by top U.S. officials to hold up confidence whenever U.S. stocks looked fragile,” Philip Wee, senior currency economist in Singapore at DBS Group Holdings Ltd., wrote in a research note today. “If so, U.S. officials may find further dollar weakness from here a threat to their efforts to dig the economy out of recession.”
The dollar and the yen still headed for their biggest weekly loss in two months against the euro as stocks advanced worldwide, reducing demand for the U.S. and Japanese currencies as a haven from the global recession.
Emerging Markets
“The currencies of emerging markets and resource-rich nations fare well against the dollar and the yen when stocks are on the rising trend, reflecting optimism about the economy,” said Yuji Kameoka, a strategist in Tokyo at Daiwa Institute of Research Ltd., a unit of Japan’s second-largest brokerage group. “The recent retreat in optimism and the re-emergence of risk- aversion may be a blip.”
The Nikkei 225 Stock Average rose 0.6 percent and the MSCI World Index climbed 0.3 percent, having gained 6.7 percent this week, the most since March.
The Canadian dollar appreciated the most of the 16 major currencies against the yen this week, climbing 5.4 percent to 83.80 yen. The Australian dollar advanced 4.1 percent over the past five days to 75 yen.
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