20000413

Dlr retreats, but still supported before G7

TOKYO: The yen recouped some of its losses against the dollar in late afternoon on Wednesday as rumoured US corporate buying apparently dried up.

Dealers said recent yen weakness partly reflected selling related to a plan by US data software giant Oracle Corp to list its Japanese unit, Oracle Corp Japan, on the Tokyo Stock Exchange later in April.

Oracle was rumoured selling the Japanese currency against the dollar in advance of what will be one of Japan's biggest ever share offers. Oracle Japan is hoping to raise about 797.6 billion yen ($7.5 billion).

The dollar was quoted at 106.41/51 yen after fading from a two-week high of 107.15 overnight. It was 106.88 yen in late US trade on Tuesday.

"Speculators who have been bidding dollars since the start of the week, partly on the back of bids related to Oracle Japan, took profits after confirming that the dollar's gains were limited above 107 yen," a US bank dealer said.

Other than the rumour, the market was quiet throughout the day with most activity driven by technical factors.

Dealers said the dollar slipped through 106.50 yen support as some Japanese investors tried to trigger stop-loss offers.

"Some Japanese investors grew tired of seeing the dollar glued at 106.50 yen for a couple of hours," said a dealer at a major Japanese city bank.

But dealers said the dollar was still well-supported at around 106.30 yen with healthy bids from Japanese and foreign investors. Speculative sellers remain cautious ahead of the Group of Seven (G7) meeting this weekend.

Japanese institutional investors, primarily pension funds and investment trusts, have been seen allocating their fresh funds into foreign securities for Japan's new fiscal year.

But dealers said this was just seasonal investment behaviour and that it was unlikely to have a significant affect on the currency market, especially since Japanese demand for foreign assets this year is expected to less than usual. The yen also regained some ground against the euro mainly in face of Japanese exporters, edging up near 102.10 yen from a low of around 103.20 on Tuesday.

Large stop-loss sales were tipped under key 102.00 support level, dealers said.

The euro failed to gain despite upgraded euro-zone economic growth forecasts by the European Commission overnight.

There was still some speculation in the market that the European Central Bank will raise rates on Thursday, but a Reuters poll found only seven of 53 economists are predicting such a move.

Elsewhere, the Bank of Japan (BOJ), inching toward a tightening of its unprecedentedly loose monetary policy, issued an improved assessment of Japan's economy on Wednesday, but it refrained from declaring a full recovery for the world's second-biggest economy.

The monthly report also deleted the mention of a strong yen hurting Japanese firms' profit.

The central bank's brighter assessment of Japanese economy may have induced some yen-buying, although the impact was limited, dealers said.-Reuters