(Corrects to note that won rose, not fell, against yen in
* Yen falls past 100-mark per dollar
* Data shows Japan investors finally start buying foreign
* Currency war talk may intensify
By Hideyuki Sano
TOKYO, May 10 Japanese Prime Minister Shinzo Abe
scored another small victory as the yen broke below major
support of 100 to the dollar, with analysts predicting further
declines over the course of the year that would underpin the
The yen fell to as low as 101.20 per dollar, down
more than two percent from Thursday's high around 98.65, and the
lowest level in over four and a half years.
Some market players say Japan's aggressive policy may have
sparked a currency war among its trade partners as Australia and
South Korea unexpectedly cut rates this week, citing their
strong currencies as one of the reasons to act.
A South Korean finance ministry official said on Friday
Seoul was worried about the pace of the yen's decline and was
studying whether new measures were needed to lessen the impact.
But Japanese economy minister Akira Amari reiterated his
position that Tokyo had no intention to manipulate currency
Still, the yen seemed set to fall further.
"Now that dollar/yen has finally gotten over the
psychological hurdle of 100, there will likely be more (dollar)
buying by those who were sceptical of Abenomics to begin with,"
Neal Gilbert, market strategist at GFT Forex in Grand Rapids,
The yen's break below the key level and a still-weak outlook
was underscored on Friday with data showing Japanese investors
finally reversed their relentless net selling of foreign bonds.
Japanese investors bought a net total of 514 billion yen
($5.2 billion) foreign bonds in the two weeks to last Friday,
data from the Ministry of Finance showed, a sign the Bank of
Japan's massive easing may be pushing them to seek higher
Japanese investors had been net sellers of foreign bonds in
the 11 of the previous 12 weeks before that, selling 5.87
trillion yen in total, including in the two weeks that followed
the BOJ's announcement on April 4 of its two-year stimulus plan
to double its bonds holdings.
The unprecedented scale of the BOJ's monetary expansion
sparked speculation Japanese investors could stampede into a
wide range of foreign bonds, from U.S. Treasuries to French or
While their latest foreign bond buying was relatively small,
traders took the first evidence of the Japanese buying spree as
another good reason to sell the yen anew.
The yen has declined more than 20 percent in the past six
months as Abe started pushing for aggressive monetary easing and
fiscal expansion, a policy mix known as "Abenomics", to end two
decades of economic stagnation.
Analysts see Abenomics as a significant force in driving the
yen lower, which in turn is putting pressure on its rivals'
The Korean won is susceptible to a weaker yen because the
two countries are fierce export competitors. The won has risen
more than 10 percent against the yen this year.
Abe is likely to see the latest slide in the yen as yet
another milestone in his push to jump start the world's third
Indeed, in a sign that the yen's slide was feeding through
to Japanese exporters, the nation's current account surplus
reached its highest level in a year in March as a result of a
narrowing trade gap and a boost to overseas income transferred
Yen selling gained momentum after the currency fell below
the stiff support of 100, where there had been strong yen buying
from Japanese exporters and option players hedging their exotic
"I wouldn't even think about shorting the dollar/yen until
around 106 where there is a convergence of retracement levels
and the rally may be running out of steam at that point anyway,"
The dollar/yen has clearly risen above 99.72, the 50 percent
retracement of its 2007-2011 fall, with 105.49, the 61.8 percent
retracement level as its next target.
($1 = 99.3050 Japanese yen)
(Additional reporting by Lisa Twaronite; Editing by Shri