* Dollar and euro rise more than 1 percent on day versus yen
* Japan finance minister says G20 not opposed to BOJ
* Yen falls prop up euro despite Italy, rate cut concerns
By Jessica Mortimer
LONDON, April 19 The yen fell on Friday after
Japan said the Group of 20 accepted its stance that its
aggressive monetary expansion was aimed at beating deflation and
not at competitive devaluation.
Traders said the lack of objection from the G20 to Japan's
policy encouraged hedge funds to resume buying the dollar
against the yen, leaving it poised to test the 100 yen mark in
the coming days.
The dollar rose more than 1 percent to hit 99.345
yen, leaving it within sight of the four-year peak of 99.95 yen
reached last week. Offers were reported around 99.50 yen,
however, which may stem its rise in the very short term.
The euro rose more than 1 percent to hit 130.05 yen
and looked on course to test last week's three-year
high of 131.10 yen.
The yen fell as Japan's Finance Minister Taro Aso eased
concerns a G20 meeting in Washington could opt to criticise
Japan for the unprecedented monetary stimulus announced earlier
this month, which prompted a tide of yen selling.
"Worries that the G20 could criticise Japan were a reason
not to push dollar/yen up before ... Now it will probably take
out 100 yen next week," said Geoff Kendrick, currency strategist
Renewed yen weakness also boosted higher-yielding currencies
like the Australian dollar, as well as the likes of the euro and
sterling on speculation that Japanese domestic investors would
increasingly seek higher yields overseas.
This helped the euro rise 0.3 percent against the
dollar to $1.3085, staying comfortably above chart support at
$1.30 and a low of $1.3001 hit earlier this week.
The euro shrugged off political uncertainty in Italy and the
prospect that the European Central Bank could lower interest
rates to support flagging growth.
"The yen story definitely impacts high-beta currencies like
the Australian dollar, and the euro at the margins. Otherwise,
euro/dollar is a sideshow at the moment," Nomura's Kendrick
Splits within Italy's centre-left led to two unsuccessful
votes for presidential candidate Franco Marini on Thursday,
prolonging the stalemate produced by an inconclusive result in
general elections in February.
In the absence of G20 criticism, traders and analysts say
the yen is likely to come under pressure in coming months.
"Now the big thing that everyone is waiting for is outflows
from Japan to take place. When it takes place, that will give
another leg up for dollar/yen," said Beat Siegenthaler, currency
strategist at UBS.
Worries Japan could be criticised increased after the United
States issued its semi-annual report on major trade partners'
the currency practices last week. It said it was watching
Japan's policies to ensure they were not aimed at devaluing the
yen for competitive advantage.
Capital flows data shows that Japanese investors, rather
than make a dash toward overseas assets this month, have instead
been repatriating funds from abroad.
However, analysts expect investors, including life insurers,
to buy foreign assets in search of higher yields.
The higher-yielding Aussie gained 0.4 percent to $1.0339
and jumped 1.5 percent to 102.66 yen. It
was, however, weaker against the dollar and yen on the week.