Japan's currency gained the most against New Zealand's dollar as investors cut so-called carry trades after the Standard & Poor's 500 Index fell to the lowest in 14 months. The yen traded near a four-month high versus the euro after European Central Bank council member Yves Mersch cited ``downside risks'' to the region's economic growth.
``The yen gained after the decline in stocks,'' said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. ``Mersch's comments were significant. Bad news from a growth point of view is going to have an impact on traders' minds.''
The yen gained for a third day to 157.38 per euro at 8:39 a.m. in Tokyo, from 157.72 late in New York yesterday, when it reached 156.29, the strongest since Sept. 10. Japan's currency was at 107.33 per dollar compared with 107.64 yen late yesterday. The euro was little changed at $1.4657.
The yen may advance to 156 per euro and 106 per dollar today, Rennie said.