* BoE's King, Russian official's comments lift dollar/yen
* BoJ policy meeting ends on Thursday
* British pound hits multimonth lows
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 13 The yen traded flat to slightly
lower against the dollar on Wednesday, a day after sharply
rising, as investors grew cautious ahead of a meeting of finance
ministers and central bankers later this week where exchange
rates are expected to be a hot topic.
Comments from Russia's deputy finance minister, Sergei
Storchak, that the Japanese currency had definitely been
over-valued and "there are no signs" Japanese authorities were
intervening weighed on the yen. Investors viewed his comments as
a nod to the yen's weak trend.
There is uncertainty related to this week's meeting of the
Group of 20 developed and emerging market economies in Moscow
and the general view that yen weakness would be on the agenda.
There was also nervousness concerning the Italian elections
and the sale of Italian government bonds at higher yields.
"There's a lot more two way-risk in the yen right now,
because of an increase in risk aversion," said Samarjit Shankar,
director of market strategy, at BNY Mellon in Boston.
He added that while some Group of 7 officials have said
Japan was not being singled out in the G& statement issued on
Tuesday, the consensus among investors is that the G7 is not
exactly thrilled with the weak yen trend.
"There could be more verbal intervention against yen
weakness, so it's no longer a safe bet to short it," Shankar
In early afternoon trading, the dollar was slightly up at
93.53 yen, below a three-year high of 94.42 yen on
Monday. The euro was last at 125.82 yen, flat on the
day and far from a 34-month high of 127.71 hit last week.
The yen rallied on Tuesday after a G7 official said an
earlier statement from the group was meant to signal worries
about excessive moves in the yen. 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.
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
April when it will meet with a new governor at 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 $1.3451. 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
An Italian auction Wednesday morning that fetched higher
yields for the first time since October weighed on the euro,
BNY Mellon flows data showed Italian bonds have been net
sold for eight consecutive sessions, while the euro has been
sold for four straight days.
"The euro's resilience of late is proving to be a
double-edged sword," said BNY Mellon's Shankar. "The single
currency's recent appreciation is likely to be a source of worry
vis-à-vis the euro zone's deteriorating export competitiveness."
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 on Wednesday fell to multi-month lows
after the Bank of England said inflation would stay higher for
longer and its governor cautioned that further bond-buying to
boost the weak recovery might have limited impact.