February 13, 2013 / 5:26 PM / 5 years ago

FOREX-Yen up vs dollar as upcoming G20 meeting has investors wary

* BoE's King and Russian official's comments lift dollar/yen

* Investors likely to be wary ahead of G20 meeting

* BOJ policy meeting ends on Thursday

* British pound hits multi-month lows

By Julie Haviv

NEW YORK, Feb 13 (Reuters) - The yen edged higher against the dollar and euro in choppy trade on Wednesday as remarks from government officials were outweighed by cautious positioning ahead of a meeting of finance ministers and central bankers later in the week.

The Japanese currency was earlier weighed by comments from Russian Deputy Finance Minister Sergei Storchak, who said the yen had definitely been over-valued and that "there are no signs" Japan's monetary authorities were intervening.

Investors have become more confident that Tuesday's Group of Seven statement was not meant to warn about recent yen weakness. The statement reaffirmed that fiscal and monetary policies would not be directed at devaluing currencies.

The yen had rallied after a G7 official said the statement was meant to signal worries about excessive moves in the yen. But Canadian Finance Minister Jim Flaherty on Wednesday said the statement was a consensus effort and not meant to single out Japan.

Moreover, Bank of England Governor Mervyn King said the statement should be taken at face value and anonymous officials should not try to reinterpret it.

"While the comments were supportive of further yen losses, there is also a general risk-off going on in equities right now and that is spilling over into currencies," said Greg Anderson, G10 strategist at CitiFX, a division of Citigroup, in New York.

"It is also a light data week and the next big event other than the G20 meeting will be Italian elections later this month," he said. "People still want to get into short yen trades, so they will wait out this week until it is in the rear view and go from there."

The euro last traded at 125.48 yen, down 0.2 percent on the day and far from a 34-month high of 127.71 hit last week.

The dollar last traded at 93.38 yen, down 0.1 percent on the day and below a three-year high of 94.42 yen on Monday.

"Volatility should pick up again next week and at the end of month and few want to put on big trades ahead of the G20 meeting," Anderson said.

Investors will likely be wary of selling the yen before the G20 meeting in Moscow on Friday and Saturday.

"To me the statement says -- as long as price action is smooth (G7 officials) are not going to do anything. So I stand by my point that we are going to have more yen weakness in the medium-term," ," said Vasileios Gkionakis, head of global FX strategy at UniCredit in London.

He said Unicredit would maintain its long euro/yen position and target 130.00 yen in three to six months.

The yen lost nearly 20 percent against the dollar between November and early February, picking up speed as Japan's new government put pressure on the Bank of Japan to ease monetary policy more aggressively to defeat deflation.

Markets were also likely to tread cautiously until the outcome of a BOJ meeting ending on Thursday, although many expect the bank to hold off from any fresh easing measures until a new governor takes the helm.

The dollar briefly pared gains against the yen after U.S. data showed retail sales barely rose in January as tax increases and higher gasoline prices restrained spending.


The euro traded flat at $1.3448. Some strategists said the euro also would be largely side-lined before the G20 meeting, although it could come under pressure if euro zone gross domestic product data on Friday shows the economy contracting.

The euro has retreated from a 15-month high of $1.3711 hit at the start of February. It extended losses last week when European Central Bank President Mario Draghi warned of downside risks to the euro zone growth outlook.

The British pound, meanwhile, fell to multi-month lows after the Bank of England said that inflation would stay higher for longer and its governor cautioned that further bond-buying to boost the weak recovery might have limited impact.

The economy was set for a "slow but sustained recovery" over the next three years and economic output is unlikely to surpass its pre-financial crisis peak until 2015, the Bank of England said in its quarterly inflation report.

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