(Bloomberg) -- The yen may extend advances after rising against all of the world’s major currencies as reports showed U.S. retail sales and producer prices unexpectedly decreased in March, adding to demand for safety.
The dollar fell for a third day against the yen yesterday, the longest stretch of declines in two months. Japan’s currency gained against the Brazilian real and South African rand as a drop in U.S. stocks made higher-yielding assets less attractive.
“Risk appetite is taking a breather,” said Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Greenwich, Connecticut. “It’s not completely dead. It’s going for fresh air.”
The yen traded at 98.83 against the dollar at 6:40 a.m. in Tokyo, after appreciating 1.1 percent yesterday. The euro was at 130.99 yen following a 1.9 percent drop. The U.S. currency fetched $1.3256 per euro after climbing 0.8 percent.
Japan’s currency gained 2.9 percent yesterday to 44.78 against Brazil’s real and 1.8 percent to 10.91 versus the South African rand as the decline in stocks reduced speculation that investors will borrow in Japan’s currency to buy higher-yielding assets elsewhere. The Bank of Japan’s target lending rate of 0.1 percent compares with 9.5 percent in South Africa and 11.25 percent in Brazil.
The Standard & Poor’s 500 Index lost 2 percent as Goldman Sachs Group Inc. fell 11 percent after raising $5 billion in a share sale to help repay $10 billion in government rescue funds.
U.S. Retail Decline
The dollar fell against the yen as the Commerce Department reported that U.S. retail sales decreased 1.1 percent last month after a revised 0.3 percent advance in February. The median forecast of 73 economists surveyed by Bloomberg was for a 0.3 percent increase. Prices paid to U.S. producers unexpectedly fell 1.2 percent, the Labor Department reported.
“It’s a hit on sentiment,” said Sebastien Galy, a currency strategist at BNP Paribas Securities SA in New York. “Right now we’re getting a little bit of risk aversion.”
The euro declined against the yen before Germany’s Federal Statistics Office releases its report on wholesale prices today. Prices fell 7.1 percent in March from a year earlier after a 5.7 percent decrease in the previous month, according to the median forecast in a separate Bloomberg survey.
“If inflation threatens to remain significantly below 2 percent for a considerable period of time, then additional policy easing could be warranted to counter that eventuality,” said Athanasios Orphanides, a European Central Bank council member, in an April 11 interview in Nicosia.
The ECB cut its benchmark interest rate on April 2 less than economists forecast, reducing it by a quarter-percentage point to 1.25 percent.
Federal Reserve Chairman Ben S. Bernanke said yesterday the dollar will keep its role as world’s main reserve currency for the “foreseeable future.” He responded to a question after a speech in Atlanta.
To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net
