Yen Declines to 11-Month Low


The yen fell to an 11-month low against the euro on speculation Japanese investors will use summer bonuses to buy overseas assets offering higher yields than at home.

The currency also declined toward a four-month low against the dollar as Japanese finance companies seek to raise more than 1 trillion yen ($9.2 billion) for funds investing abroad by June 30, according to data compiled by Bloomberg.

The yen fell to 168.19 per euro at 8:09 a.m. in London from 167.35 last yesterday in New York. It reached 168.24, the lowest since July 23, 2007. The currency declined to 108.08 per dollar from 107.85 yesterday and a four-month low of 108.58 on June 16. The dollar traded at $1.5547 per euro from $1.5518.

Volatility implied by dollar-yen options expiring in one month fell to 10.55 percent from 10.61 percent. Traders quote the measure of expectations for currency swings as part of pricing options. Lower volatility reduces the risk exchange-rate moves will erode the profit from investing overseas.

Against the Australian dollar, the yen fell to a seven- month low of 103.21. It also declined to 212.80 per British pound from 211.97.

Employees at private companies may get summer bonuses totaling 14.8 trillion yen this year, down 1.8 percent from a year earlier, according to Kazuyoshi Nakata, an economist in Tokyo at Mitsubishi UFJ Research and Consulting Co., a unit of Japan's largest publicly traded lender by assets.

T&D Asset Management Co. will seek to raise 500 billion yen for a fund focused on Chinese environment-related business on June 27. Daiwa Asset Management Co. will seek 20 billion yen for commodity funds. Japan's benchmark rate of 0.5 percent is the lowest among major economies, making assets outside of the country more attractive to domestic investors.


TradingEconomics.com, Bloomberg
6/24/2008 6:26:33 AM