Yen weakens in Asia after G-20 pledges not to devalue currencies

Japan's policy of monetary easing has led to sharp falls in the value of the yen, sparking fears of a global currency war in which rival nations drive down their units to gain a trade advantage.

Since November the U.S. dollar has gained about 17 percent against the yen while the euro has jumped about 25 percent, leading to claims that Tokyo is manipulating the unit.

But the Japanese government and the Bank of Japan (BOJ) have denied orchestrating a devaluation of the yen, which weakened Monday to 93.95 against the U.S. dollar from 93.53 in New York on Friday. It also lost ground against the euro, buying 125.32 yen from 124.97 yen.

The euro also bought US$1.3344 from US$1.3360 in New York on Friday.

The G-20 statement issued on Saturday said: “We will refrain from competitive devaluation,” adding “we will not target our exchange rates for competitive purposes.”

The pledge echoed a statement by the G-7 richest nations earlier in the week. Neither named Tokyo as a currency manipulator.

The yen's return to a weakening trend — after rising before the G-20 talks started Friday — signaled that Tokyo was free to pursue its economy-boosting policies, National Australia Bank said in a note.

“We believe this means the yen is free to weaken, but Japanese officials must refrain from being seen to be goading the yen to weaker levels,” it said.

The BOJ, under pressure from Japan's new conservative government, last month unveiled a plan for unlimited monetary easing and an ambitious target for 2-percent inflation as part of a bid to beat lingering deflation.

A number of senior Japanese officials have speculated publicly about the yen being over-valued based on its previous stronger levels.

Markets are also watching for the nomination of a new BOJ governor as traders bet that Prime Minister Shinzo Abe will choose a candidate who shares his desire for aggressive policy easing.

The U.S. dollar was higher against other Asia-Pacific currencies, firming to 40.65 Philippine pesos from 40.59 pesos, and to 54.33 Indian rupees from 53.92 rupees.

The greenback also strengthened to 29.89 Thai baht from 29.83 baht, to SG$1.2394 from SG$1.2360, and 1,081.90 South Korean won from 1,078.20 won.

It was unchanged at 9,670 Indonesian rupiah.

The Australian dollar slipped to US$1.0295 from US$1.0362 while Chinese yuan firmed to 15.04 yen from 14.84 yen.

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