March 10 (Bloomberg) -- For the first time in more than a decade, foreign exchange traders are confident that the Bank of Japan won't intervene in the currency market, paving the way for the yen to extend its biggest rally since 2000.
Japanese authorities sold the currency on all four occasions since 1995 when the yen approached the 100 mark in a bid to support exporters from
Toyota Motor Corp. to
Sony Corp. When the yen strengthened to a eight-year high of 101.43 last week, Finance Minister
Fukushiro Nukaga stopped short of signaling that officials are concerned, only saying the government needs to watch currency moves ``carefully.''
Citigroup Inc. and Royal Bank of Scotland Group Plc, the third- and fourth- biggest traders, say Nukaga will let the yen break 100 because it's 40 percent weaker than its peak in 1995 on a
trade-weighted basis.
``The U.S. now welcomes a gradual decline in the dollar and Treasury takes the position of Detroit. This is affecting how Japan is responding now.''
U.S. officials probably won't support dollar purchases unless the yen breaks 90 and heads toward 80, said Sakakibara. Central banks intervene in the foreign exchange market when they buy or sell currencies to influence exchange rates.
100 Barrier
The yen will rise to 95 per dollar, according to Citigroup, Lehman Brothers Holdings Inc., the fourth-biggest U.S. securities firm, and Mizuho Financial Group Inc., Japan's second-largest publicly traded bank. Deutsche Bank AG and UBS AG, the world's two biggest currency traders, predict the dollar will hold above 100.
