Yen Gains Against Peers After Japanese Cut Foreign Debt Holdings

The yen rose against its 16 major peers after Japanese data showed domestic investors sold foreign bonds for a fifth week, casting doubt on whether Bank of Japan (8301) monetary stimulus will continue to weaken the currency.

Demand for the yen was also supported after the world’s third-largest economy posted a narrower-than-estimated trade deficit last month. The Dollar Index (DXY) remained higher as Asian stocks fell, boosting demand for the greenback as a haven.

“This tremendous weakening in the yen has produced little more than profit taking by the Japanese themselves,” said Sean Callow, senior foreign-exchange strategist in Sydney at Westpac Banking Corp. (WBC) “It gives the impression that money is not flowing out of Japan at all right now, so it’s at least cause for investors to have a bit of a rethink” about the effectiveness of BOJ policy.

The yen rose 0.4 percent to 97.69 per dollar as of 10:06 a.m. in Tokyo after losing 1.4 percent in the previous two days. It gained 0.5 percent to 127.21 per euro. The dollar traded little changed at $1.3024 per euro following a 1.1 percent gain yesterday.

The Dollar Index, which tracks the greenback against the currencies of six major trade partners, was little changed at 82.636 after climbing 1.1 percent yesterday. The MSCI Asia Pacific Index of shares fell 0.9 percent.

(Source: Bloomberg)