The yen weakened, falling toward 100 per dollar for the first time since April 2009, after Bank of Japan Governor Haruhiko Kuroda said he was emboldened to press ahead with a campaign to defeat deflation.
Japan’s currency dropped against 14 of its 16 major counterparts after the Group of 20 offered no opposition to the central bank’s monetary stimulus policies at a meeting last week in Washington. Sweden’s krona strengthened after Riksbank Deputy Governor Lars E.O. Svensson said he will leave the central bank after failing to get support for deeper interest-rate cuts. The euro rose for a third day versus the yen after Giorgio Napolitano was re-elected to a second term as Italian president.
“The G-20 gave a green light to sell the yen,” Kiran Kowshik, a currency strategist at BNP Paribas SA in London, said in a telephone interview. “The focus now is on what a lot of the Japanese investor base is doing in the new fiscal year.”
The yen fell 0.2 percent to 99.73 per dollar at 8:23 a.m. in New York after depreciating to 99.90, the weakest since it declined to a four-year low of 99.95 on April 11. Japan’s currency dropped 0.1 percent to 130.02 per euro. The euro was little changed at $1.3036.
Nippon Life Insurance Co., Japan’s largest life insurer, said it may buy more foreign debt and cut holdings of long-term domestic securities if yields in Japan stay low. Japanese investors were net sellers of foreign bonds during the week ended April 12 according to figures based on reports from designated major investors released by the Ministry of Finance last week.
“These Japanese outflows will begin,” Kowshik said. “Clearly it’s not been seen in the weekly portfolio flow data, but we think that is something that will come through.”
G-20 finance chiefs and central bankers meeting on April 19 praised the measures taken by the BOJ this month aimed at increasing inflation to 2 percent within two years. They signaled Japan’s focus on supporting domestic demand was strong enough to allow them to ignore the side effects on their own economies of a sliding yen.
“Winning international understanding gives me more confidence to conduct monetary policy appropriately,” Kuroda told reporters after the gathering. “We will continue our qualitative and quantitative easing for the next two years.”
The BOJ is scheduled to deliver its next policy statement in Tokyo on April 26 after announcing larger-than-expected stimulus measures at its previous gathering on April 4.
The yen has dropped 5.5 percent against the dollar in April after falling for the previous six months, the longest losing streak since 2001.
“The BOJ has definitely altered the psychology of the market” toward the yen, said Stephen Gallo, European head of currency strategy at Bank of Montreal in London. “The safe- haven attributes of the yen have been fundamentally and drastically altered for the foreseeable future.”
Futures traders increased bets the yen will weaken versus the greenback last week, according to data from the Commodity Futures Trading Commission. The difference in the number of wagers by hedge funds and other large speculators on a decline compared with those on a gain -- so-called net shorts -- was 93,411 on April 16, compared with 77,697 a week earlier.
The krona appreciated against all 16 of its major counterparts after Svensson said he would step down when his term expires next month.
“I haven’t managed to get support for a monetary policy that I consider would lead to better target fulfillment,” he said in a statement explaining his decision. Svensson has advocated bigger rate cuts than the majority of the central bank’s board, arguing his colleagues’ policies are costing jobs.
Svennson’s departure “sees the Riksbank lose its most dovish member and therefore reduces the probably of a cut later this year,” Matthew Slade and Geoff Kendrick, strategists at Nomura International Plc in London, wrote in a note to clients. They recommended investors bet the krona will strengthen to 8.25 per euro.
The krona gained 0.4 percent to 8.5114 per euro and rose 0.3 percent to 6.5238 per dollar.
The euro rose toward the highest since January 2010 against the yen as Napolitano was re-elected president on April 20 after the country’s divided Parliament had failed to agree on a candidate in the first five rounds of voting.
Napolitano will now take the lead in trying to end the political gridlock that’s left the country without a new government eight weeks after inconclusive elections.
“As long as we can avoid the inevitability of elections, this weekend’s development is positive in that regard, then, that provides a little bit of support under the euro,” said Ray Attrill, global co-head of currency strategy at National Australia Bank Ltd. in Sydney.
South Korea’s won dropped the most in two weeks against the dollar on speculation policy makers will favor depreciation to support South Korean exporters as the yen’s slide to a four-year low makes Japanese rivals more competitive.
“The G-20 meeting raised concerns that there’s room for the yen to weaken further, which may hurt South Korea’s export competitiveness,” said Jeon Seung Ji, an analyst at Samsung Futures Inc. in Seoul. “Speculation that authorities may step in to weaken the won to protect exporters is pushing the currency lower.”
The won fell 0.3 percent to close at 1,119.05 per dollar after dropping as much as 0.7 percent, most since April 8.