The Yen declines as traders see Japan's Current-Account deficit widening

The yen declined against the dollar and the euro on concern Japan’s economy will deteriorate further after a government report showed the nation posted its first current-account deficit in 13 years in January. The yen fell to 98.73 against the dollar in London today the currency also dropped to 124.87 per euro. “There is lingering concern about the trend of exports due to the continued global recession,” said Akio Yoshino, chief economist at Societe Generale Asset Management (Japan) Inc. in Tokyo. “Declines in exports mean less need for Japanese companies to repatriate sales generated outside Japan.” The USD/JPY is currently trading at 98.65 as of 8:20am, GMT.

The dollar slowly inched up slightly against the euro and held steady on the yen on Monday, as a record current account deficit in Japan, a gloomy economic picture in the United States and technical dynamics pulled the market in different directions. But gloomy news from the United States, in the form of the highest unemployment rate since 1983, left market participants with little hunger for the U.S. currency either. Traders said flows were light in Asian business, with the main dollar-buying interest coming from foreign investors selling Japanese equities and dollar-selling coming in part from Japanese companies but also from proprietary trading desks. The EUR/USD is currently trading at $1.2630 as of 8:35am, GMT.

The Australian and New Zealand dollars advanced as the U.K. government said it will cover 260 billion pounds ($367 billion) of assets at Britain’s biggest mortgage lender, bolstering investors’ appetite for risk. “The U.K. government agreeing to provide asset protection seems to have helped risk aversion a little,” said Besa Deda, chief economist at St. George Bank Ltd. in Sydney. “The Aussie, while higher, is still in the trading range it has become accustomed to,” she said, using the currency’s nickname. The GBP/AUD is currently trading 2.1912 as of 8:42am, GMT.

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