* Yen rebounds after official warns on recent moves
* Investors likely to be wary ahead of G20 meeting
* BOJ policy meeting ends on Thursday
By Nia Williams
LONDON, Feb 13 The yen rose against the dollar
and was steady against the euro on Wednesday, holding gains made
after an official from the Group of Seven cited concerns about
excessive weakness in Japan's currency.
Investors are concerned policymakers will use a G20 meeting
later this week to caution against the pace of the yen's recent
falls, which could help the Japanese currency extend its
The yen leapt in a volatile session on Tuesday after a G7
official said a statement from the group was meant to signal
worries about excessive moves in the currency.
The dollar extended losses on Wednesday, dropping 0.2
percent on the day to 93.26 yen. It hit a near three-year
high of 94.465 on Monday. Earlier in the session it fell as low
as 92.82 yen.
The euro was flat at 125.80 yen, retreating from
the 34-month high of 127.71 hit last week, and some market
players said it would remain vulnerable to profit-taking in the
run-up to the G20 meeting.
"The yen crosses will come lower ahead of the weekend,
mostly because it's an excuse to take profit, given how far we
have come," said Geoff Kendrick, FX strategist at Nomura.
"Presumably on the weekend there will be something that
talks about the pace of moves in the yen. That's what the market
is expecting now."
Westpac strategists recommended selling dollar/yen via
The yen had lost nearly 20 percent against the dollar since
November, picking up speed as Japan's new government put
pressure on the Bank of Japan to ease monetary policy more
aggressively to defeat deflation. That gave investors incentive
to sell yen.
While many were cautious before the G20 meeting some market
participants said the G7's words would not alter the yen's
"Overall, what the G7 said did not change the basic thinking
in the Tokyo market, and no one expects the yen to fall back to
previous ranges in the 80s [against the dollar] because of it,"
said Toshiyuki Suzuki, senior market economist at the Bank of
Tokyo-Mitsubishi UFJ in Tokyo.
In their statement, G7 governors and ministers reaffirmed
their commitment that fiscal and monetary policies would not be
directed at devaluing currencies.
Investors were also likely to tread cautiously until the
outcome of a BOJ meeting ending on Thursday, although many
expect the bank to hold off on any fresh easing measures until a
new governor takes the helm.
G20 finance officials meet in Moscow on Friday and Saturday.
The euro edged up 0.1 percent to $1.3465, with
traders citing demand from Middle East buyers.
Some strategists said the euro would be largely sidelined
before the G20 meeting, although it could come under pressure if
euro zone gross domestic product data on Friday shows the
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 on downside
risks to the euro zone growth outlook.
The single currency fell against the Swedish crown to 8.4975
crowns, its lowest since early October. The crown rose after the
Riksbank kept interest rates on hold, wrongfooting some market
players who had positioned for a cut.