Yen Rises to 8-Month High on Repatriation, Intervention Concern

Sept. 28 (Bloomberg) -- The yen rose to the highest level in eight months versus the dollar on prospects Japanese exporters are repatriating profits before the fiscal first half ends this week.

Japan’s currency also advanced against all of its 16 major counterparts on speculation the nation’s government won’t intervene to stem the currency’s gain. The Australian dollar fell to its weakest level in eight months versus the New Zealand currency on speculation the smaller South Pacific nation’s central bank will raise rates from a record low.

“Japanese firms are continuing to bring home profits,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The government’s stance on a strong yen is careless, as it doesn’t benefit the nation’s export- driven economic structure.”

The yen climbed to 88.99 per dollar as of 9:24 a.m. in Tokyo from 89.64 in New York on Sept. 25. It earlier touched 88.24, the strongest level since Jan. 23. The currency rose to 130.66 per euro from 131.70, after earlier rising to 129.83, the highest since July 14. The dollar traded at $1.4690 per euro from $1.4689.

The Australian dollar bought NZ$1.1991, the least since Jan. 13, before trading at NZ$1.2025 from NZ$1.2069 in New York on Sept. 25.

Japan’s currency gained on expectations the nation’s exporters are taking advantage of an April 1 rule change that waives taxes on repatriated profits. Under previous laws, companies had to pay a combined 40 percent tax on overseas earnings. The first half of Japan’s fiscal year ends Sept. 30.

Yen Forecasts

Large manufacturers in Japan forecast the yen would average 94.85 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released July 1.

Japanese Finance Minister Hirohisa Fujii said last week he didn’t support a weak yen, fueling speculation Japan won’t resort to intervention to curb yen’s appreciation. Central banks intervene in foreign-exchange markets by selling and buying currencies.

In a survey released by Japan’s Cabinet Office on April 22, exporters said they can remain profitable as long as the yen trades at 97.33 per dollar or weaker. A rising currency hurts exporters by making their goods more expensive to foreign buyers and reducing the value of profits earned abroad. Exports account for 12 percent of Japan’s economy, compared with 6 percent in the U.S.