Yen Gains on Receding Optimism Europe Will Give Aid to Greece

March 16 (Bloomberg) -- The yen rose against the euro on receding optimism that European Union finance ministers will provide financial assistance to Greece, boosting demand for the Japanese currency as a refuge.

The yen gained versus all 16 major counterparts after Luxembourg Prime Minister Jean-Claude Juncker said finance ministers from the euro region didn’t decide on specific instruments to aid Greece at yesterday’s meeting in Brussels. The U.S. dollar is poised to gain for a second day against the pound on speculation more Federal Reserve policy makers will dissent at today’s meeting from the central bank’s commitment to keep interest rates near zero for an “extended period.”

“Definitely, there are worries that concrete aid measures for Greece may not be announced,” said Hideki Amikura, deputy general manager of foreign exchange at Nomura Trust & Banking Co., a unit of Japan’s largest brokerage. “It’s a negative for the euro against the dollar and the yen.”

Japan’s currency advanced to 123.26 per euro as of 9:35 a.m. in Tokyo from 123.83 in New York yesterday. It climbed to 90.24 per dollar from 90.53. The euro declined to $1.3661 from $1.3677, and bought 90.81 pence from 90.83 pence.

The yen gained for a second day against Europe’s common currency before all 27 EU finance ministers meet later today. On the agenda in addition to Greece are proposals to clamp down on hedge funds and credit default swaps.

The European currency has fallen 4.5 percent against the dollar this year amid concern Greece’s rising debt-servicing costs will keep it from narrowing a budget deficit that is more than four times the European Union’s 3 percent limit.

“The market is priced for slow, grinding assistance to Greece,” said Michael Katz, a currency strategist at Forecast Ltd. in Sydney. The Fed’s “‘extended period’ language will be more vigorously debated, which could be dollar supportive and be seen as a step closer to them actually changing the language.”