Yen Rises Before Japan Opposition Announces BOJ Nominee Stance

The yen climbed against all of its major peers before Japan’s political parties announce their stance on the nominees to lead the Bank of Japan.

The premium on the right to buy the yen over that to sell it climbed to an eight-month high yesterday after Japan’s largest opposition party rejected Kikuo Iwata’s nomination for central bank deputy governor. The greenback maintained gains versus the euro before U.S. data today that may show retail sales increased for a fourth-straight month.

News on Iwata “has helped knock down dollar-yen,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “It has gone way beyond what you can justify in terms of relative economic fundamentals and prospective action by the central bank.”

The yen gained 0.2 percent to 124.95 per euro as of 9:07 a.m. in Tokyo and advanced 0.2 percent to 95.91 per dollar. The dollar was little changed at $1.3029 per euro after rising 0.1 percent yesterday.

The three-month dollar-yen risk reversal rate slid as much as 36 basis points to negative 0.0325 percent yesterday, a level unseen since July 11, indicating increased demand for options to buy the yen versus the dollar. It’s little changed at negative 0.01 percent today.

Your Party, the Japan Restoration Party and the New Renaissance Party are scheduled today to announce their intentions on the confirmation votes for Haruhiko Kuroda to become BOJ governor and Hiroshi Nakaso and Iwata to be deputy chiefs. The Democratic Party of Japan yesterday said it would vote against Iwata.

(Source: Bloomberg)