The yen also gained against the Australian dollar and the British pound on concern oil prices close to $130 a barrel and the collapse of the subprime-mortgage market will hamper global growth. The dollar traded near a three-week low against the euro on concern Federal Reserve minutes released today will highlight concern the U.S. economy will slow.
The yen rose to 103.31 per dollar by 8:44 a.m. in London, from 103.68 late yesterday in New York. Against the euro, it climbed to 161.73 from 162.22. The euro traded at $1.5657, from $1.5646, after earlier reaching a three-week high of $1.5686.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the two. The risk is that currency moves erase those profits. Japan's benchmark interest rate of 0.5 percent compares with 7.25 percent in Australia and 5 percent in the U.K.