May 9, 2013, 2:02 p.m. ET
Dollar Jumps Above ¥100

By TAKASHI MOCHIZUKI
The dollar rose above the key threshold of 100 yen Thursday for the first time in four years, capping a 15% surge this year, after better-than-expected U.S. economic data sparked a broad rally in the greenback.
The dollar finally breached the ¥100 barrier after flirting with the level since Japan's central bank on April 4 unveiled an aggressive plan to add money to its economy in a bid to jump-start growth.

It got an extra push Thursday, after the U.S. Labor Department said the number of Americans filing for jobless benefits fell in the latest week to the lowest level since before the recession.
It was the first time a dollar bought more than ¥100 since April 14, 2009. At that time the yen was strengthening in the aftermath of the global financial crisis. It would later get another boost from the European debt crisis.
"For many market participants, ¥100 was certainly a milestone, although in the longer term it is just a passing point," said Yuji Saito, director of foreign exchange at Credit Agricole ACA.FR -0.07%in Tokyo.
Within days of the Bank of Japan's April 4 announcement, the dollar leaped 7% against the yen. Traders reasoned that the measures would sharply increase the supply of yen; the market also expected Japanese investors to sell yen in a move to boost holdings overseas in search of better returns. That shift has yet to materialize, although big insurers are expected to unveil plans to move some money to overseas bonds.
The dollar's fast rise has prompted many brokerage houses to raise their forecasts for the dollar and the view is increasing that the greenback may reach ¥110, or even higher, by the end of this year.
The yen's fall has also been a critical factor in helping to push Japan's stock market sharply higher in a rally that has pushed the Nikkei Stock Average to its highest levels since July 2008.
The dollar's rise above ¥100 is the latest milestone in a turnaround in sentiment from last November, when Japanese Prime Minister Shinzo Abe, then running for the office, said he wanted to see a massive quantitative easing by the BOJ to help end Japan's long-running deflationary pressures.
New Bank of Japan Gov. Haruhiko Kuroda responded in April with a program that involved "all the policy measures imaginable at this point." At the core is a plan to purchase Japanese government bonds and other assets at a much faster pace with a never-before-seen doubling of the monetary base over the next two years. The monetary base is the core figure for the money supply. An increase in the money stock will tend to push the value of the currency lower.
"It is the first time I can remember Japanese policy makers truly and positively surprising markets for a long time, perhaps even ever in my 32 years of work," said Jim O'Neill, chairman of Goldman Sachs GS -0.79%Asset Management.




Reuters The yen has been sliding against the dollar since November, when then-candidate Shinzo Abe declared that as prime minister he'd push the Bank of Japan to be more aggressive.

While officials say the move is aimed at pulling the economy out of the deflation that has hampered growth since the mid-1990s, they are also glad to see it push down the stubbornly strong yen.
With the global economy hit by recession and Europe in the throes of its euro-zone crisis, the yen had been on what appeared to be an inexorable rise as a safe haven.
Before signs of trouble in the financial sector emerged in 2007, the dollar had been above ¥120. As the euro-zone crisis added to global concerns, the dollar reached a post-World War II low of ¥75.31 on Oct. 31, 2011.
Repeated currency interventions by Japan had managed to slow the rise but not reverse the overall direction. Between September 2010 and October 2011, Japan intervened four times.
The stronger currency has undercut Japan's big industrial exporters in their attempts to sell against their Korean and German rivals. In response they continued to shift manufacturing overseas, worsening a "hollowing out" that has plagued the domestic economy over the past 20 years. That in turn has kept wages under pressure, further adding to deflationary pressures.
Group of 20 finance ministers said in late April that they agreed that Japan's massive monetary easing was needed to boost growth, a sign that they weren't stepping up pressure on Tokyo over the yen's recent drop.
"The G-20 statement is a de facto approval of the BOJ's easing measures and a go-ahead for us to push the dollar above the ¥100 mark," said Rakuten Securities fixed-income department manager Tsutomu Soma.
Write to Takashi Mochizuki at takashi.mochizuki@dowjones.com
http://online.wsj.com/article/SB10001424127887324695104578414600879216248.html