Yen gains as G20 in focus, weak Europe dampens shares

Fri Feb 15, 2013 5:59am EST
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By Richard Hubbard

LONDON (Reuters) - The yen rose on Friday as the Group of 20 struggled to find a common stance on recent currency moves, while renewed fears over global growth weighed on shares and commodities.

The meeting in Moscow of finance officials from the Group of 20 nations, which account for 90 percent of the world's economy, is set to be dominated by sparring over the motives behind expansive economic policies that have driven currency moves.

Uncertainty over the meeting's outcome saw traders cut short yen positions on Friday, sending the Japanese unit up 0.5 percent against the dollar to 92.40 yen and the euro down to a two-week low of 123.10 yen.

At issue is whether the loose monetary and fiscal policies of the United States, Japan, Britain and the euro zone amount to strategies of "competitive devaluation" or currency manipulation intended to boost exports and growth.

Attention has focused mostly on Japan, where the new government of Prime Minister Shinzo Abe has appeared to specifically target a weaker yen to stimulate the economy.

But European political leaders have also raised possibility of political interference in exchange rate policy with French President Francois Hollande last week calling for a medium-term target for the euro.

The Group of Seven rich powers - four big EU economies, Japan, the United States and Canada - weighed in to the debate this week by reaffirming a shared commitment to market-determined exchange rates, but some quickly undermined the united front with off-the-record briefings critical of Japan.

"There is an issue of 'who started the fire?' You can say that Japan is getting really aggressive but then they might say, 'well, what have the Americans done?', 'what about the British?' and so on," said William De Vijlder, chief investment officer at BNP Paribas Investment Partners.   Continued...

Visitors cast their shadows on the logo of the Tokyo Stock Exchange, prior to a ceremony marking the end of trading in 2012 at the Tokyo Stock Exchange in Tokyo December 28, 2012. REUTERS/Kim Kyung-Hoon