Yen Strengthens as Exporters Bring Home Profits; Stocks Slide

By Sandy Hendry
March 9 (Bloomberg) -- The yen strengthened against all 16 of the most-traded currencies as Japanese companies brought home profits before the fiscal year ends, while the British pound weakened on disappointing housing data. Most Asian stocks fell.
Japan’s currency climbed 0.85 percent against the pound and
0.6 percent versus the South Korean won at 5 p.m. Tokyo time on speculation exporters are taking advantage of a tax break enacted last year on repatriated overseas earnings. Commodity shares slid on concern China’s metals demand may stagnate. The MSCI Asia Pacific Index and the Stoxx Euro 600 was little changed. Standard & Poor’s 500 futures fell 0.1 percent.
"Companies may repatriate as much as 1.5 trillion yen
($16.6 billion) of overseas profit in March," said Tohru Sasaki, chief currency strategist in Tokyo at JPMorgan Chase & Co.
"There’s a need to be aware of the high possibility for yen appreciation pressure, at least on a temporary basis."
The inflow of dollars reflects a recovery in Asian export earnings as the global economy recovers from its worst recession since World War II. The S&P 500 has climbed 68 percent since March 9 last year, when the gauge reached its lowest level following the bankruptcy of Lehman Brothers Holdings Inc.
The yen appreciated to 89.94.00 per dollar from 90.31 yesterday in New York. It gained to 122.38 per euro from as low as 123.90 yesterday, the weakest since Feb. 23. The currency strengthened to 12.62 won and to 134.83 yen per pound.
An appreciation in China’s currency would also benefit the yen, said Takashi Kudo, general manager of market information in Tokyo at NTT SmartTrade Inc. The yuan, pegged at 6.83 per dollar, faces pressure to appreciate because of a widening interest-rate differential, the State Administration of Foreign Exchange said today.

Pound Declines

Sterling declined on a weaker-than-expected home values report. The number of real-estate agents and surveyors saying U.K. house prices rose exceeded those reporting declines by 17 percentage points, the Royal Institution of Chartered Surveyors said today. Economists predicted 30 points, according to a Bloomberg News survey.
Sterling, the worst performer among major currencies this year, fell to $1.4992 per dollar from $1.5066 as opinion polls stoked concern the U.K. may elect a minority government that will be unable to control the record budget deficit. National elections must be held by June.
"There are still lingering worries over the sustainability of the U.K.’s economic recovery," said Nobuaki Kubo, vice president of foreign exchange in Tokyo at BBH Investment Services Inc.

Greece, Dubai

The euro traded at $1.3604 from $1.3634 yesterday. Losses in the currency were tempered on speculation wealthier European nations will rescue Greece financially if needed.
U.S. President Barack Obama will meet with Greek Prime Minister George Papandreou in Washington today. Yesterday, the difference in yield between the five-year Greek note and its German equivalent fell to its lowest in six weeks on optimism Greece can reduce its budget deficit.
Dubai World, the state-owned holding company trying to renegotiate about $26 billion of debt, will present a plan to creditors this month, three bankers familiar with the talks said yesterday. The Dubai Financial Market General Index of stocks edged up 0.2 percent, after rising 1.7 percent yesterday.
Credit default swaps linked to Dubai fell 27 basis points to 480 basis points yesterday, prices provided by CMA DataVision show. The swaps pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent.
Treasury yields were near the highest level in two weeks as the U.S. prepared to sell a record-tying $40 billion of three- year notes today, the first of three auctions this week totaling
$74 billion. The three-year notes scheduled for sale today yielded 1.45 percent in pre-auction trading, rising from 1.377 percent at the previous sale of the securities on Feb. 9.

Declining Stocks

Decliners beat advancers 5 to 3 on the MSCI Asia index. Rio Tinto Group, the world’s third-largest mining company, lost 1 percent in Sydney after metal prices dropped yesterday. BHP Billiton Ltd., the biggest, retreated 0.3 percent.
"There are seeds of risk everywhere around us," said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees about $67 billion. "At the same time, we’re seeing some positive news among the risk seeds."
China’s Shanghai Composite Index added 0.5 percent as developers gained after a central bank deputy governor Su Ning said there’s no need for new measures to cool the property market and China Life Insurance Co. boosted its profit forecast.

China’s Shares

Poly Real Estate Group Co., China’s second-largest developer by market value, jumped 4.4 percent. China Life, the nation’s biggest insurer, advanced 3.1 percent after forecasting
2009 profit more than tripled. Developers have led a 6.5 percent loss by the gauge this year on concern growth in the world’s third-largest economy will slow as the government reins in stimulus.
"Fears the government will impose harsh property measures seem overstated," said Zhang Xiuqi, a Shanghai-based strategist at China International Fund Management Co., which oversees about
$10.2 billion. "Developers are cheap at this level."
Copper for three-month delivery increased 0.3 percent to $7,490 a metric ton. Gold for immediate delivery fell 0.2 percent to $1,121.43 an ounce, after dropping 1 percent yesterday, the most since Feb. 17, on speculation Greece’s fiscal crisis will be resolved.
Oil declined for the first day in three as the dollar strengthened and analysts forecast an increase in U.S. crude supplies last week, signaling demand from the world’s biggest energy consumer may be slowing. Crude for April delivery dropped
0.5 percent to $81.47 a barrel in electronic trading on the New York Mercantile Exchange. Yesterday, the contract rose 37 cents to $81.87, the highest settlement since Jan. 11.