FOREX-Yen falls as Japan PM quits, Kan likely successor

* Yen falls as Japan PM Hatoyama says to resign

* Eur/dlr steady; Iran reportedly to sell euros

* Traders wary of taking on more short euro positions

* ECB’s Noyer says euro not unusually low; US data in focus

(adds comments, updates prices)

By Jessica Mortimer

LONDON, June 2 (BestGrowthStock) – The yen fell on Wednesday after
the resignation of Japanese Prime Minister Yukio Hatoyama,
particularly as his likely successor has in the past taken a
tougher stance in fighting yen strength.

The yen hit a two-week low against the dollar after Hatoyama
and his deputy resigned to try to boost the ruling party’s
faltering fortunes in an election next month. [ID:nTOE65100Q]

Analysts said concerns about political instability were
weighing on the Japanese currency, though the focus was on
Hatoyama’s expected replacement, Finance Minister Naoto Kan,
because he has previously advocated a weak yen.

Kan surprised markets earlier this year by saying he wanted
the yen to weaken more and that most businesses favoured a
dollar/yen rate around 95 yen. Since then he has mostly toed the
ministry line that stable currencies are desirable and markets
should set foreign exchange levels.

“If the position does fall to Kan, then the bias will be
towards a slightly weaker yen,” said Gavin Friend, currency
strategist at nabCapital.

At 1042 GMT, the dollar was up 1 percent at a two-week high
around 91.97 yen (JPY=: ), while the euro (EURJPY=R: ) gained 1.2
percent to 112.37 yen.

Against the dollar, the euro (EUR=: ) was steady at
$1.2227 in volatile trade, weighed down after Iran’s state-owned
Press TV said on its website that the Iranian central bank would
sell 45 billion euros from its foreign exchange reserves to buy
dollars and gold. [ID:nnLDE651111]


The euro took a knock earlier after European Central Bank
board member Christian Noyer was cited as saying the single
currency’s exchange rate against the dollar was at around a
10-year average and “by no means an unusually low level”.

However, it recovered after government sources in Brazil,
India, Japan and South Korea said they would not stop investing
in the weakening currency. [ID:nTOE650069]

Traders also said investors were wary of renewing short euro
positions after taking a hit from the currency’s sharp upswing
on Tuesday following its slide to a four-year low.

“The overall picture is one of negative sentiment on the
euro, but you have to be wary as the market is very short,”
nabCapital’s Friend said.

The euro stayed close to the four-year low of $1.2110 hit on
trading platform EBS on Tuesday, with the currency sensitive to
any signs the euro zone sovereign debt crisis was spreading to
its banking system.

“Very few investors are ready to put on long euro/dollar
positions, and any spikes are due to profit taking on short
positions,” said Niels Christensen, currency strategist at
Nordea in Copenhagen.

The U.S. dollar (.DXY: ) rose 0.3 percent against a basket of
currencies to 86.898, hovering below a 15-month high as market
players looked ahead to U.S. jobs data on Friday which is
expected to provide more evidence of a strengthening economy.


FOREX-Yen falls as Japan PM quits, Kan likely successor