LONDON: The yen fell on Friday as macro funds resumed selling after Japan said the Group of 20 accepted its stance that its aggressive monetary expansion was aimed at beating deflation and not at competitive devaluation.
The comments by Japanese Finance Minister Taro Aso eased concerns that the unprecedented monetary stimulus, which was announced earlier this month and triggered a drop in the yen to a four-year low versus the dollar last week, could be criticised at a G20 meeting in Washington.
The dollar rose 1 percent to 99.24 yen as investors such as macro funds stepped up yen-selling. Traders cited offers to sell the dollar at 99.25/30 yen but, beyond that, the US currency was on course to hit 100 yen for the first time in four years. The euro rose more than 1 percent to 129.68 yen .
"Some in the market were worried so investors have reacted to news that Japan has not been criticised," said Beat Siegenthaler, currency strategist at UBS. "Now the big thing that everyone is waiting for is outflows from Japan to take place. When it takes place, that will give another leg up for dollar/yen."
Worries Japan could be criticised increased after the United States issued its semi-annual report on major trade partners' the currency practices last week. It said it was watching Japan's policies to ensure they were not aimed at devaluing the yen for competitive advantage.
G20 policymakers are expected to confirm a February pledge to avoid competitive devaluations, officials have said.
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