The yen declined against the dollar, euro and Swiss franc as Japan posted its first trade deficit in 13 years, reducing the currency’s appeal as a haven.
Britain’s pound slipped against the dollar and euro after the UK government took a majority stake in its biggest mortgage lender, Lloyds Banking Group, and as HSBC Holdings fell to the lowest level since May 1995. The dollar rose against 15 of the 16 most actively traded currencies as global stocks fell, supporting demand for safety.
“The poor Japanese trade-deficit data is giving further fuel to the idea that Japan, or the yen, is no longer a safe haven as the country’s external position deteriorates,” said Adam Cole, London-based head of global currency strategy at the Royal Bank of Canada.
The yen weakened 0.9 per cent to 99.13 per dollar at 7:08 a.m. in New York, from 98.25 on March 6. Japan’s currency depreciated 0.3 per cent to 124.75 per euro from 124.34. The euro fell 0.6 per cent to $1.2580 from $1.2653. The yen weakened 0.3 per cent to 85.15 versus the franc from 84.94.
Japan, the world’s second-biggest economy, recorded a current-account deficit of 172.8 billion yen ($1.76 billion) in January, the Finance Ministry in Tokyo said. The median forecast of economists surveyed by Bloomberg News was for a 15.3 billion yen shortfall. It was the biggest trade deficit since January 1985, the earliest year for which there are comparable data.
“There is lingering concern about the trend of exports due to the continued global recession,” said Akio Yoshino, chief economist at Societe Generale Asset Management (Japan) in Tokyo. “Declines in exports mean less need for Japanese companies to repatriate sales generated outside Japan.”
Reversed course Asian central banks are abandoning a six-month campaign of defending their currencies, reversing course to cheapen exports that are falling the most in a decade.
