FOREX-Yen declines on year-end U.S. dollar demand

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, March 31 (Reuters) - The dollar rose against the yen
on Tuesday amid fiscal year-end demand by Japanese companies and
the Chinese yuan stood firm after a survey showed manufacturing
returned to growth in March.
Tuesday is the last trading day of Japan's fiscal year and
the end of the quarter for major investors elsewhere, which has
fueled some volatility as big currency market players closed
their books. The bulk of those positioning changes caused the
dollar to strengthen.
"The talk is Japanese names are short of dollars, which is
likely to keep the dollar bid well into London time," said Yukio
Ishizuki, FX strategist at Daiwa Securities in Tokyo.
Against a basket of six other currencies =USD , the dollar
rose 0.4%to 99.5. It reached 102.99, its highest in more than
three years, earlier this month as a global market selloff
fuelled a rush for dollars. Dollar demand has ebbed, but
analysts are still forecasting more dollar gains. For the quarter, the dollar was the biggest gainer =USD ,
rising 2.5%. The Norwegian crown was the biggest loser NOK=D3 ,
falling 19% versus the greenback.
The dollar rose 0.52% to 108.38 yen JPY=EBS on Tuesday.
The Chinese yuan CNY=CFXS CNH=D3 was the only currency to
buck the trend, holding firm against the dollar in both the
onshore and the offshore market.
China's official manufacturing Purchasing Manager's Index
unexpectedly showed activity swung to expansion in March.
China's economy is still expected to see a large contraction in
the first quarter. The euro EUR=EBS fell 0.35% to $1.1003 and sterling
GBP=D3 declined 0.88% to $1.2310.
Broader market gauges of dollar funding and market
volatility also declined from multi-year highs on Tuesday.
Three-month currency swaps in euro-dollar EURCBS3M=ICAP
flipped into a rare premium against the dollar.
Those volatile moves are probably a function of quarter-end
flows rather than pointing to any structural imbalances in the
FX markets, according to Kenneth Broux, a currency strategist at
Societe Generale in London.