Yen Rises to 15-Year High as Kan Wins; Asian Stocks Fluctuate

By Yasuhiko Seki and Clyde Russell
Sept. 14 (Bloomberg) -- The yen rose to a 15-year high versus the dollar as Prime Minister Naoto Kan beat Ichiro Ozawa in a vote today for control of the ruling party, while Asian stocks fluctuated after three days of gains. New Zealand’s dollar fell for the first time in five days as spending slowed.
Japan’s currency climbed to 83.26 per dollar as of 4:07 p.m.
in Tokyo from 83.71 in New York yesterday after earlier rising to 83.09, the strongest level since May 1995. New Zealand’s dollar fell to 72.82 U.S. cents from 73.42 yesterday. The MSCI Asia Pacific Index rose 0.1 percent to 123.89. The Stoxx Europe 600 was little changed at the London open. Futures on the Standard & Poor’s 500 Index were also little changed.
The victory by Kan over Ozawa in the race to head Japan’s ruling Democratic Party of Japan will lower the likelihood the government will sell yen to weaken the currency. Investors are gaining confidence in equities as Warren Buffett ruled out a second recession in the U.S. Asian stocks led by Thailand and Indonesia have entered bull markets with gains of 30 percent since the May 25 low.
“Kan has shown a less aggressive stance than Ozawa on currency intervention,” said Kazuya Yashiro, a Tokyo-based foreign-exchange analyst at Himawari Securities Inc. “His victory will therefore give some opportunities to test the upside of the yen.”
Japan’s currency also strengthened against all 16 of its major counterparts as the nation’s stocks dropped, boosting demand for safer assets. The yen climbed to 107.26 per euro from 107.83. The euro fell to $1.2861 from $1.2883.

Kiwi Weakens

New Zealand’s dollar dropped against all 16 of its major counterparts amid speculation growth will slow this quarter as the nation’s worst earthquake in 80 years reduces output. Retail sales fell 0.4 percent in July from the previous month, Statistics New Zealand said. The median forecast in a Bloomberg News survey of economists was for sales to be unchanged.
China’s yuan surged to the strongest level since 1993 on speculation the government will allow appreciation to head off U.S. trade sanctions as its economy improves. The currency gained 0.3 percent to 6.7446 per dollar and touched 6.7470, the strongest level since the central bank unified official and market exchange rates at the end of 1993.
The central bank fixed the reference rate at 6.7378 per dollar, the highest level since the dollar peg was scrapped in July 2005, before the U.S. House Ways and Means Committee discusses China’s currency policy tomorrow and Sept. 16.

Yuan Appreciation

“China doesn’t want to see the relationship with the U.S.
get hurt because of the currency issue,” said Lu Ting, a Hong Kong-based economist at Bank of America-Merrill Lynch. “There will be more space for yuan appreciation also because signs show the economy will have a soft landing.”
Japanese stocks fell for the first time in four days as the stronger yen cut the outlook for export earnings. Toyota Motor Corp., which gets more than 70 percent of sales from abroad, dropped 1.7 percent. The Nikkei 225 Stock Average fell 0.2 percent.
The MSCI Emerging Markets Index rose for a fourth day, climbing 0.1 percent to 1,034.81. The gauge of 21 developing nations yesterday entered a so-called bull market after gaining more than 20 percent from its May 25 low. It rebounded from a slump of 18 percent from this year’s high reached on April 15.

Bull Markets

Indexes in the Philippines, Thailand and Indonesia have all entered a bull market and are the best performers among the 12 largest stock markets in Asia this year. The Bombay Stock Exchange’s Sensitive Index is nearly 20 percent above its May 25 low.
Asian commodity stocks rose as a forecast for faster European economic growth boosted confidence in a global recovery.
BHP Billiton Ltd. advanced 1.3 percent. Mitsubishi Corp., which receives 40 percent of sales from commodities, rose 1 percent.
“The sense of uncertainty about the future of the global economy is easing,” said Masumi Yamamoto, a market analyst at Tokyo-based Daiwa Securities Capital Markets Co.
Silver for immediate delivery advanced 0.8 percent to
$20.21 an ounce, beating the 30-month high reached yesterday of
$20.19 on sustained demand for precious metals from investors seeking to protect their wealth.
Treasuries rose for a second day with the 10-year note yield declined one basis point to 2.74 percent in Tokyo, according to data compiled by Bloomberg.