(Bloomberg News) The yen strengthened against the dollar, surging to a post-World War II high, on speculation Japan will delay intervention to limit the currency's advance as the nation struggles to avert disaster at a nuclear-power plant.
The yen soared 4.5% in 26 minutes as markets closed in New York yesterday and re-opened in Asia amid speculation automated trades to limit losses were taking place. Finance Minister Yoshihiko Noda said Group of Seven officials will meet tomorrow to discuss the aftermath of last week's earthquake in Japan. The Swiss franc strengthened on demand for a haven and higher-yielding currencies, such as the New Zealand dollar, fell.
"Intervention, that continues to be the question on everyone's mind, and what will come out of the G-7 finance ministers' conference," said Mary Nicola, a currency strategist at BNP Paribas SA in New York. "A high yen undermines local investors' appetite, leading to a further decline in Japan's stock market. Japan needs a weaker yen, mainly for exports, especially as domestic demand is held back given the impact of the earthquake."
The yen gained 1.1% to 78.72 per dollar at 9:45 a.m. in New York, after touching 76.36. Japan's currency advanced to 110.21 per euro from 110.62, after climbing to 106.61, the strongest since Sept. 13. The euro appreciated 0.7% to $1.3999, after rising to $1.4053, the highest since Nov. 8.
The G-7 discussions will begin at 7 a.m. Tokyo time and encompass currencies, Noda told reporters in the capital today. Japan will brief officials on the damage to the economy, he said. Noda declined to comment on any possible intervention.
Japanese Economic and Fiscal Policy Minister Kaoru Yosano urged calm trading of the yen and said he hopes officials from the G-7 nations will express unity during talks tomorrow. Yosano was speaking at a press briefing in Tokyo today.
New Zealand's dollar dropped the most among the major currencies, and Australia's currency slumped, as the Nikkei 225 Stock Average fell as much as 5%, damping demand for higher-yielding assets.
Switzerland's franc advanced to 89.11 centimes per dollar, a record high, before trading 0.8% stronger at 90.09. The Swiss central bank left its key interest rate at 0.25% today, as expected by all 20 economists in a Bloomberg News survey. The currency appreciated versus all major counterparts except the yen.
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