April 22 (Bloomberg) -- The yen rose against the euro for a second day on prospects U.S. President Barack Obama will call for new financial regulations, boosting demand for Japan’s currency as a refuge from turmoil in the global banking sector.
The yen advanced against all 16 major counterparts as Asian stocks dropped. Obama’s spokesman yesterday said the president will call for new regulations in a speech today at New York’s Cooper Union. The 16-nation euro traded near a two-week low against the dollar on concern discussions of a 45 billion-euro ($60.3 billion) aid package for Greece will fail to stem the nation’s debt crisis.
“The markets are wary over what Obama may say about new financial-industry regulations,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “The mood is leaning toward risk aversion. The bias is for the yen to be bought.”
The yen rose to 124.38 per euro as of 9:53 a.m. in Tokyo from 124.77 in New York yesterday. The yen gained to 92.88 per dollar from 93.19. The euro was at $1.3388 from $1.3390 yesterday, when it touched $1.3359, the lowest since April 9.
The Nikkei 225 Stock Average fell 1.7 percent today and the MSCI Asia Pacific Index of regional shares declined 0.7 percent.
“Financial reform is something that is born out of an economic collapse that started on Wall Street and spread to Main Street America,” White House press secretary Robert Gibbs said in previewing the president’s address.
Obama’s Speech
Obama is giving the address as he and Democratic leaders push to get legislation on rules for financial markets through Congress by next month. The House passed its version last December. The Senate is poised to take up legislation sponsored by Connecticut Democrat Christopher Dodd, the chairman of the Banking Committee.
The Securities and Exchange Commission last week filed a lawsuit against Goldman Sachs Group Inc. for fraud linked to its derivatives trading.
“The Goldman issue will take time to be solved, keeping stocks in a downtrend,” said Minoru Shioiri, chief manager of foreign-exchange trading in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan’s largest publicly traded bank by market value. “There’s a downside risk for cross currencies against the yen.”
The yen tends to strengthen during economic and financial turmoil because Japan’s trade surplus makes it less reliant on foreign capital.
Greece’s Debt
Demand for the euro waned after talks started yesterday on an assistance package including 30 billion euros from the European Union and as much as 15 billion euros from the International Monetary Fund. Greece Finance Minister George Papaconstantinou said the nation may request aid before talks on the conditions for the loans conclude in two weeks.
“I don’t see positives coming out of the Greece situation,” said Toshiya Yamauchi, manager of foreign-exchange margin trading at Ueda Harlow Ltd. in Tokyo. “The issue is deep, and negotiations among nations are also complicating the matter. The euro is poised to continue to fall gradually.”
Greece’s deficit of 12.9 percent of gross domestic product is more than four times the EU limit. Budget shortfalls across the euro region have surged as governments bailed out banks and spent billions on economic stimulus.
The IMF yesterday cautioned that if nations fail to contain soaring public debt that may have “severe” consequences for the world economy.
The yield premium investors demand to hold Greek 10-year bonds instead of benchmark German bunds climbed to 5.01 percentage points, the highest level since at least March 1998.
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