Yen declines to a seven-week low

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Yen declines to a seven-week low

The yen touched its lowest level in seven weeks after U.S. President Barack Obama called for a pause in authorizing military strikes on Syria, and a worldwide equity rally eroded demand for Japan’s currency as a haven.

The yen has fallen 1.5 percent in the past week, the biggest loss among 10 developed-market currencies tracked by Bloomberg Correlation Weighted Indexes.

The dollar rose against its major peers before Federal Reserve Bank of New York President William C. Dudley speaks today amid forecasts that policy makers will announce a slowing in bond purchases next week.

The pound sterling traded near its highest level since June before data estimated to show that U.K. jobless claims fell for a 10th month.

“Obama is talking conciliation and a delay of any military strike, so that will be a positive for risk,” said Tony Allen, the global head of Group of 10 currency trading at Australia and New Zealand Banking Group in Singapore. “We should see the yen weaken.”

The yen was little changed at 100.35 per dollar as of 7:26 a.m. in London after touching 100.61, the least since July 22.

It traded at 132.97 per euro from 133.18 Tuesday and reached 133.38, the weakest since May 22. The euro fetched $1.3251 from $1.3268, after earlier touching $1.3282, the most since Aug. 29.

The MSCI Asia Pacific Index of regional stocks was little changed following a nine-day, 6.2 percent gain, the longest rally in the benchmark index this year.

Demand for the yen was dented as the yield gap between U.S. and Japanese 10-year bonds reached 222 basis points, the most since April 2011. Japanese bonds have bucked a global sell-off, aided by central bank purchases of more than 7 trillion yen ($69.7 billion) each month as part of a plan to double the money supply by the end of 2014.

The Bank of Japan offered to buy 600 billion yen ($5.98 billion) of government securities today, its fourth purchase operation so far in September.

The BOJ will make adjustments to policy as needed, board member Koji Ishida said in a speech today in Aomori, northern Japan. It’s vital for the government to maintain fiscal trust, he said.

The central bank estimated that its current-account balance, a measure of financial firms’ deposits at the BOJ, rose to a record 91.4 trillion yen yesterday.

Bloomberg

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