* Traders on alert for intervention to weaken the yen
* G7 to meet around 6 p.m. (2200 GMT) on market turmoil
* Swiss franc buoyed, near record high vs dollar
(Updates prices)
By Wanfeng Zhou
NEW YORK, March 17 (Reuters) - The yen edged off a record
high against the dollar on Thursday ahead of a conference call
by Group of Seven finance ministers on fears officials may soon
intervene to rein in the currency's rapid rise.
The dollar hit a record low of 76.25 yen <JPY=EBS> on
trading platform EBS. Asian trading began after a break of the
previous record low of 79.75 triggered a cascade of automatic
"sell" orders. The dollar later bounced back to hover around 79
yen.
G7 finance officials will hold talks via conference call
from around 6 p.m. (2200 GMT), and traders said the market may
trim lingering yen longs shortly before that, which could push
the dollar toward its session peak around 79.75 yen.
A Dow Jones news report quoted an unnamed source as saying
Japan's ministry was "ready for battle" on the yen. A G7 source
said G7 nations are not expected to agree firm policy action
but will offer solidarity to Japan and review its plight. For
details, see [] []
"We believe that unilateral intervention with the approval
of the G7 is likely following tonight's meeting and that joint
intervention or a one off coordinated response is possible,"
said Sara Yates, currency strategist at Barclays Capital in
London.
"However, we believe the main motivation for this will be
to 'lean against the wind' and prevent a rapid and potentially
destabilizing appreciation of the yen, rather than to depress
the yen over time," Yates said.
The yen has seen steady buying since last week's
earthquake, as Japanese and international investors closed long
positions in higher-yielding, riskier assets such as the
Australian dollar, funded by cheap borrowing in the Japanese
currency.
Expectations that Japanese insurers and companies will
start bringing money home to pay for claims and reconstruction
may also have helped boost the yen.
Japan's finance minister, Yoshihiko Noda, blamed
speculation for the yen spike and said he was closely watching
markets, a warning that authorities may soon buy dollars. See
[]
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BREAKINGVIEWS-Yen spike overstates alarm over Japan
[]
COLUMN-Look to sell USD/JPY near 80 []
Japan shares fall, funds eye yen []
Q+A on flat forwards []
Japan desperate to cool reactors []
Japan crisis graphics http://r.reuters.com/fyh58r
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The dollar rebound was driven partly by Japanese importers
and some retail margin traders. The latter were cited as a main
factor behind the earlier plunge, with the speed of the decline
-- the dollar shed more than three yen in about 20 minutes --
forcing them to dump trades financed with borrowed yen.
CHANCE OF SUCCESS HARD TO PREDICT
G20 deputies held a conference call to discuss the crisis
in Japan on Thursday but the talks did not broach currency
exchange rates. See []
Some analysts doubted any intervention would be effective,
given past experiences by the Bank of Japan and the Swiss
National Bank.
"Intervention is no panacea. Everyone knows it. Japan has a
much bigger credibility problem and that'll weaken the impact,"
said David Gilmore, a partner in FX Analytics in Essex,
Connecticut.
"I don't think we've seen the low in the dollar/yen.
There's still a lot of carry trade exposure. The world is
really levered up on this," he said.
Other analysts said intervention may be more effective this
time than it was in September when Japan spent $26 billion to
weaken the yen but failed to ensure a lasting dollar rally.
"This entire move can be pinned down to speculative
positioning rather than any repatriation flows," said Lee
Hardman, currency economist at Bank of Tokyo-Mitsubishi. "Since
it is speculative, intervention in this case should work and
clear out some of the long yen positions."
The cost of hedging against a further yen rise jumped, with
implied volatility on one-month dollar/yen <JPYVOL> trading
close to 20 percent, though still below levels seen at the peak
of the 2008 global financial crisis.
Absent intervention, there's little to stand in the way of
further yen gains, said Alan Ruskin, Deutsche Bank's global
head of G10 currency strategy.
"The Japanese probably did themselves a bad turn when it
comes to credibility" by not stepping in sooner, Ruskin said.
"People may be more inclined to fight intervention now than
they would have been yesterday, and it looks like active types
are looking to sell upticks," he added.
The euro hit a 2011 high of $1.40534 on EBS <EUR=EBS> after
solid demand at a Spanish bond auction and on the view that
euro zone interest rates were likely to rise soon. It was last
up 0.9 percent at $1.4025.
The dollar fell to a record low of 0.8852 Swiss francs
<CHF=EBS> before bouncing back above 0.90 francs. While the
Swiss central bank kept interest rates steady, the franc got a
bid from investors who see it as a safe port in a storm.
(Additional reporting by Steven C. Johnson and Julie Haviv;
Editing by Andrew Hay)
