Yen Falls as Gain in U.S. Stock Futures Spurs Demand for Yield
The yen fell, reversing a gain, on speculation an advance in U.S. stock futures will give investors more confidence to buy higher-yielding assets funded in the Japanese currency, Bloomberg reported.
The yen snapped a two-day winning streak against the dollar after U.S. Treasury Secretary-nominee Timothy Geithner urged Congress to pass a stimulus plan with "sufficient strength" to revive the economy. Japan's currency also ended two days of gains versus the euro after a technical chart signaled its 8.5 percent advance this month was excessive.
"There's talk that some investors are selling the yen for dollars and euros as they seem to perceive the dollar-yen and the euro-yen reached attractive buying levels," said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan's biggest bank. "The yen has also risen quite a bit so some players may be reducing long positions in the currency." A long position is a bet an asset will gain.
The yen fell to 89.97 versus the dollar as of 1:01 p.m. in Tokyo from 89.76 late in New York yesterday. It earlier rose as high as 89.69. Japan's currency dropped to 116.71 per euro from 115.85 late yesterday, after touching 115.30, the strongest since Oct. 28. The yen also weakened to 125.68 against the British pound after reaching a record high of 124.02.