Yen hits 5-month high on dollar
By Geraldine Ryerson-Cruz
Bloomberg News Service
NEW YORK The yen rallied to a five-month high against the dollar after Japan's government said the worst of the country's third recession in a decade is over.
Investors snapped up Japanese stocks, fueling demand for yen, after the government said its outlook for growth in the world's second-largest economy improved for a third month because rising exports are helping end a yearlong manufacturing slump.
"Any positive signs in Japan will fuel demand for yen from international investors who've been underweight" on Japanese assets, said Grant Wilson, a senior currency trader at Mellon Financial Corp. in Pittsburgh.
The yen strengthened 2 percent to 125.58 per dollar from 128.13 late yesterday, passing the 126 level for the first time since Dec. 12. It later traded at 125.86, still its biggest gain since March 7, closing out its fourth weekly climb in five.
(A stronger yen helps Hawai'i tourism as it makes travel to the Islands cheaper for Japanese.)
The benchmark Japanese Nikkei 225 stock average rose for a fourth day, reaching a two-month high and increasing demand from international investors for the currency to buy shares.
"Foreign investors have been getting into Japanese assets," which has helped the yen, said Adrian Cunningham, who helps oversee $150 million at Abbey National Plc's Talorcan hedge fund in Glasgow, Scotland. The Japanese economy "will be helped by the global recovery, but only in the short-term."
The improved outlook for Japan came as a report showed factory use rose 2.7 percent in the three months ended March 31 from the previous quarter, the biggest increase in almost three years. The rise tracked a 0.7 percent rise in production.
Account surplus figures this week showed Japan's exports rose a third-straight month. The jobless rate also unexpectedly fell in March to 5.2 percent from February's 5.3 percent.