Yen continues to weaken on privatization plan concerns

Story link: Yen continues to weaken on privatization plan concerns

The yen weakened even more on Friday, mostly on worries about the consequences to political stability should Prime Minister Junichiro Koizumi’s post office privatization plan not be approved by the upper house of Japan’s parliament when it votes on the measure next week.

Concern became even more acute after the vote was delayed from today to Monday, which was taken to be a sign that not enough votes had been secured to gain passage of the legislation.

The yen lost 1.3 percent on the week to the euro, to ¥138.20, fell to ¥198.88 in relation to sterling, a drop of 0.6 percent. The Japanese currency also lost 1 percent this week in relation to the Australian dollar, to ¥85.95.

Analysts said, however, that if the post office privatization legislation does win approval, the yen could well stage at least a modest comeback.

The yen did gain 0.5 percent for the week in relation to the US dollar, to stand at ¥112.04. The dollar also lost ground against the euro, sterling, and the Swiss franc.

The greenback lost 1.7 percent during the week in relation to the euro, to a 2-month low of $1.2333, fell 1.1 percent to $1.7746 against sterling, and dropped 1.8 percent to SFr1.2652 in relation to the Swiss franc. Most analysts believe that the recent rally by the dollar has simply run its course.

The US currency has not been able to make gains even amid good economic news, and many central banks and hedge funds have been rumored to be selling the dollar in favor of the euro.