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Recasts with Kuroda’s comments, details

By Leika Kihara

TOKYO, May 13 (Reuters) – Bank of Japan Governor Haruhiko Kuroda said recent sharp yen moves were undesirable, echoing comments by the finance minister in a sign policymakers were focusing on the speed of moves in gauging the impact of the currency’s slump on the economy.

Kuroda said the yen’s drop would affect households and firms in different ways, refraining from repeating his past comments a weak yen was generally good for Japan’s economy.

“It’s important for currency rates to move stably reflecting economic and financial fundamentals,” Kuroda told parliament on Friday.

“The recent sharp, short-term fluctuations in the yen are undesirable, as it heightens uncertainty and makes it harder for companies to set business plans,” he said on Friday.

The remarks were line with those made by Finance Minister Shunichi Suzuki, who said recent sharp yen moves were undesirable and that exchange-rate stability was important.

“A weak yen gives exports a boost but leads to higher import prices,” he told the same parliament session.

The yen’s slump to two-decade lows against the dollar has emerged as a source of concern for Japanese policymakers, as it inflates already rising costs of fuel and raw material imports.

Kuroda had repeatedly said a weak yen is good for the economy as a whole, as it boosts the value of profits Japanese firms earn overseas. The view contrasted with Suzuki’s remarks that recent yen falls were bad for the economy.

In Friday’s parliament session, Kuroda reiterated the BOJ’s resolve to keep monetary policy ultra-loose to support an economy that has yet to emerge from the pain inflicted by the COVID-19 pandemic.

“The economy is in the midst of a recovery and now faces headwinds from rising commodity prices,” Kuroda said. “It’s therefore important to underpin economic activity with powerful monetary easing.”

(Reporting by Leika Kihara; Editing by Tom Hogue and Kim Coghill)

((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters Messaging: leika.kihara.reuters.com@reuters.net))

JAKARTA, May 13 (Reuters) – Indonesia’s foreign exchange reserves dropped to $135.7 billion by the end of April, compared with $139.1 billion at the end of March, the central bank said on Friday.

The decline was due to government foreign debt payments and other foreign exchange needs “in line with an improvement of economic activities”, Bank Indonesia said, adding that the level was equivalent to meeting 6.9 months of imports and sufficient to support Indonesia’s external stability.

(Reporting by Fransiska Nangoy
Editing by Ed Davies)

((Fransiska.Nangoy@thomsonreuters.com;))

JAKARTA, May 13 (Reuters) – Indonesia’s economic growth is expected to top 5% in 2022, the finance ministry’s head of fiscal office said on Friday, cushioned by high exports and despite the risk of rising inflation.

Febrio Kacaribu said Indonesia’s inflation level was “manageable” compared to other countries and pledged that fiscal policy would prioritise ensuring households retained purchasing power. Indonesia’s consumer price index in April hit its highest point since 2017. nJ9N2U002O

(Reporting by Fransiska Nangoy
Editing by Ed Davies)

((Fransiska.Nangoy@thomsonreuters.com;))

Adds comments and details, updates prices

By Bharat Gautam

May 13 (Reuters) – Gold prices held ground near a three-month low on Friday as the strongest dollar in two decades continued to sap demand for greenback-priced bullion, setting up what could be the metal’s fourth consecutive weekly fall.

In choppy price action, spot gold XAU= was flat at $1,823.25 per ounce, as of 0244 GMT, hovering near its lowest level since Feb. 7 hit earlier in the session.

U.S. gold futures GCv1 edged down 0.1% to $1,823.00.

“The fall through support by gold at $1,835.00, and the sell-off in other precious metals overnight, leave gold vulnerable to deeper losses and a potential test of support at $1,780.00 an ounce,” OANDA senior analyst Jeffrey Halley said.

The dollar =USD steadied near a fresh 20-year high scaled on Thursday as concerns persisted that the U.S. Federal Reserve’s actions to tame inflationary pressures would crimp global economic growth, boosting the currency’s safe-haven appeal.USD/

Bullion has lost 3.1% so far this week, its most in two months.

Last week, the U.S. central bank hiked its benchmark overnight interest rate by an aggressive half-a-percentage point. nL2N2X433H nL2N2X419C

Bullion is sensitive to rising U.S. short-term interest rates and bond yields, which raise the opportunity cost of holding it. US/

“Nominal yields will also climb, creating double-yield trouble for gold investors as the Fed will remain hawkish until inflation indicators fall,” said Stephen Innes, managing partner at SPI Asset Management.

Gold’s recent slide almost wipes out gains from a rally driven by safe-haven demand after Russia’s invasion of Ukraine in February. The conflict powered gold prices all the way to near-record levels in mid-March. nL3N2X34FS

Spot silver XAG= was up 0.6% at $20.79 per ounce, platinum XPT= gained 0.9% to $952.02, and palladium XPD= rose 1.9% to $1,944.77. However, all were poised for weekly losses.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Sherry Jacob-Phillips)

((BharatGovind.Gautam@thomsonreuters.com; +91-80-6182-3021/ 3590 (If within U.S. call 651-848-5832 );))

By Wayne Cole

SYDNEY, May 13 (Reuters) – The Australian and New Zealand dollars looked set to notch another week of heavy losses on Friday, as growth forecasts for China were downgraded and the yuan extended its decline.

The Aussie was lying at $0.6870 AUD=D3, after a 1.2% drop overnight brought losses for the week to an eye-watering 2.8%. It dived as deep as $0.6829, lows not seen since June 2020, and risks a further decline to at least $0.6777.

The kiwi lurched to $0.6240 NZD=D3, having shed 2.4% for the week to as low as $0.6219. There is little in the way of chart support until the psychological $0.6000 bulwark.

It was notable that the Aussie also slid against the yen, indicating the flight to safety was spreading wider. The Aussie was at 88.26 yen AUDJPY=, having shed 2.4% overnight to a two-month low of 87.26.

Adding to the pain was China’s decision to limit unnecessary travel outside the country by its citizens, part of a drastic COVID-19 response that has hammered prices for industrial commodities.

JPMorgan this week slashed its China growth forecasts and now sees GDP contracting by an annualised 1.5% in the current quarter. It warned data on retail sales and industrial production due on Monday would show hefty falls.

The grim outlook has caused a month-long decline in the yuan and encouraged investors to sell the Aussie as a liquid proxy.

The Aussie has now lost 10% on the U.S. dollar in six weeks, a boon for local commodity exporters but a headache for the Reserve Bank of Australia (RBA) given it will only add to imported inflation.

The market 0#YIB: is fully priced for another RBA hike of 25 basis points in June to 0.6%, but it could be larger depending on what data on wages and jobs show next week.

Annual wage growth is seen picking up to a seven-year high around 2.5%, while unemployment could fall under 4.0% for the first time since the early 1970s.

“This will underscore how tight the labour market is, supporting our expectation that the acceleration in wages growth is really only just underway,” said David Plank, head of Australian economics at ANZ.

“And once higher wages growth is established, it typically takes a lot of rate hikes to bring it back down,” he added. “This sets the backdrop for our continued expectation that a cash rate of 3%+ will ultimately be required.”

The general flight to safety has been a relief for bonds with three-year bond futures YTTc1 up 25 ticks for the week to 97.080 and off a decade-low of 96.675.

(Editing by Jacqueline Wong)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))