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Kyodo News The U.S. dollar is likely to weaken against the yen this week, helped by the return of market bulls expecting a stronger Japanese economy.

Dealers said they expect the dollar to move somewhere between 105 yen and 109 yen.

Japan is scheduled to release its gross domestic product data for the January-March quarter in early June, and rosy predictions will likely reappear toward the release date, dealers said.

“Although the influence of Japan’s GDP was eroded after the New York Times reported a manipulation of GDP data, there are still expectations the figure will be strong,” said Katsunori Suzuki, a dealer at Citibank in Tokyo.

The New York Times reported Wednesday that the Japanese government deliberately omitted an important component from the calculation of the October-December growth rate released May 11.

The article precipitated a yen-selling spree Wednesday in New York. In an unusual move the following day, the Economic Planning Agency announced it would likely revise downward its GDP date for the last quarter of last year to around minus 1.6 percent from a preliminary figure of minus 1.4 percent.

The yen’s tolerance to the erosion of confidence in the GDP data, however, may provide a yen-buying incentive for the coming week, said Kazuki Fujita, a foreign exchange manager at the Industrial Bank of Japan.

The dollar failed to climb to the 108 yen level Friday in Tokyo, even through Finance Minister Kiichi Miyazawa suggested that Japan, taking into account the revised October-December figure, could fail to attain its 0.6 percent real growth target for fiscal 1999.

“Japan’s economic fundamentals have not been considered good (these days), but a good showing may trigger a big reactionary move,” providing a boost to the yen, he said.

Political uncertainty involving the “divine nation” remark by Prime Minister Yoshiro Mori could also have helped depress the yen, but it did not, he said.

Nobuaki Kubo, a dealer at Daiwa Bank, attributed his forecast for a higher yen to a dissolution of the Lower House, planned for Friday, as the market is fed up with the current regime and expects fresh faces and policies.

Relatively good performances by Japanese firms, most of which released earnings reports Friday, may also support the yen by luring foreign investors back to Tokyo, Citibank’s Suzuki said.

But the release of U.S. employment data for May on Friday is feeding a variety of speculation, dealers said.

If the currency market favors a wider gap between U.S. and Japanese interest rates, a strong figure would help lift the dollar, but it may also prompt dollar selling if the New York equity market tumbles again, they said.