Forex Trading - March 6

Yen Declines Against Dollar as Koizumi Urges BOJ Caution on Policy Shift
March 6 (From Bloomberg) -- The yen fell the most in a month as Japan's Prime Minister Junichiro Koizumi urged the central bank to ``make a careful decision'' when deciding this week whether to end its policy of keeping interest rates near zero percent.

Japan's currency declined to an almost two-week low as investors pared bets the Bank of Japan will lift rates this year. Chief Cabinet Secretary Shinzo Abe also said ``mild deflation'' still lingers in Japan.

``Investors got too excited about a near-term policy change,'' said Sophia Drossos, a currency analyst at Morgan Stanley in New York. ``This is probably not the time to bet on yen strength. We need to add more fuel to the fire to get going.''

The yen dropped to 117.46 against the dollar as of 10:28 a.m. in New York from 116.38 on March 3. The Japanese currency weakened to 141.16 per euro from 140.17, a fifth day of losses, and also declined against all the 16 most actively traded currencies tracked by Bloomberg.

Fifty-nine percent of traders, strategists and investors surveyed by Bloomberg on March 3 advised selling the yen against the dollar this week.

The euro retreated from a one-month high against the dollar as a report showed European retail sales fell in February by the most in eight months. The euro traded at $1.2018, from $1.2045 on March 3, after earlier advancing as high as $1.2093.