Yen Slumps After Japan Intervenes to Curb Rise

Yen Slumps After Japan Intervenes to Curb Rise; Most Asian Stocks Advance

By Shiyin Chen - Aug 4, 2011 9:42 AM GMT+0800

The yen dropped the most in about five months against the dollar after Japan intervened in the foreign-exchange market to weaken its currency. Most Asian stocks rose, led by exporters, and commodities rebounded.

The yen dropped 1.6 percent to 78.32 as of 10:39 a.m. in Tokyo and also fell 1.6 percent to 112.17 versus the euro. Japan’s 10-year bond futures gained, while the Nikkei 225 Stock Average surged 1 percent. The dollar-based MSCI Asia Pacific Index fell 0.2 percent, even as two shares rose for every one that slid. Standard & Poor’s 500 Index futures added 0.6 percent. Oil rose for the first time in five days and metals jumped, led by a 1.2 percent gain in zinc.

Finance Minister Yoshihiko Noda said Japan took unilateral action to sell the yen, which earlier this week neared a post- war record. The move comes a day after the Swiss central bank cut interest rates and said it will boost the supply of francs to curb the “massively overvalued” currency. Concern the U.S. recovery is faltering had driven investors toward the relative safety of the yen and the franc, and is spurring speculation the Federal Reserve will start another stimulus program.

Most Asia markets thrashed over economic fears

Shipping-, resource-related stocks tumble, but gold miners climb

By V. Phani Kumar and Sarah Turner, MarketWatch

HONG KONG (MarketWatch) — Most Asian shares were beaten down Wednesday as mounting concerns about slowing global growth and shaky sovereign debt led investors to dump equities in favor of investments perceived to be safer, such as gold.

Extending losses suffered Tuesday on signs that global manufacturing was slowing, Japan’s Nikkei Stock Average /quotes/zigman/715506 JP:NIK -2.15% ended the day 2.1% lower at 9,637.14, while Australia’s S&P/ASX 200 index /quotes/zigman/1653884 AU:XJO -2.27% skidded 2.3% to 4,332.8.

Hong Kong’s Hang Seng Index /quotes/zigman/2622475 HK:HSI -1.91% fell 1.9% to 21,992.72, and South Korea’s Kospi KR:0100 -2.59% sank 2.6% to 2,066.26. Taiwan’s Taiex gave up 1.5% to 8,456.86 while China’s Shanghai Composite index /quotes/zigman/1859015 CN:000001 -0.03% ended little changed at 2,678.48. full stories...

FUNDVIEW-U.S. debt problems keep FX managers away from dollars

By Naomi Tajitsu

LONDON | Mon Aug 1, 2011 9:44am EDT

LONDON Aug 1 (Reuters) - A deal to increase U.S. borrowing may prevent a debt default, but currency fund managers say it would do little to shake off their bearish stance on the dollar, adding they would remain underweight on assets denominated in the U.S. currency.

At the same time, they are hesitant to pick up Swiss franc-denominated assets, given the franc's surge to all-time highs. They preferred to stay overweight in emerging currencies on the view that developing economies will continue to grow faster than developed ones.

Some see the risk the U.S. may lose its AAA rating even if the Senate on Monday passes a deal to raise the debt ceiling and cut about $2.4 trillion from the deficit over the next decade.

Managers on Monday said this was another reason to avoid the world's most liquid currency, along with weak U.S. economic growth prospects and the ongoing shift away from dollars by reserve managers.

"Even if this plan goes through, it won't change things much," said Thanos Papasavvas, head of currency management at Investec Asset Management, which has $10 billion in assets under management.

"(Because of) the structural story, the cyclical story, and the reserves story, we have a pretty negative outlook on the dollar," he said, adding he saw a "decent" possibility that Washington would lose its triple-A status.

Papasavvas said he remained underweight dollar assets as a result, while adding he was overweight those denominated in euros and Asian and emerging currencies. more stories...