The currency climbed the most versus the New Zealand dollar, a beneficiary of the so-called carry trade, after Merrill Lynch & Co. reduced its recommendation on financial shares yesterday and U.S. reports showed consumer confidence and home values dropped. The yen climbed about 8 percent against the dollar and euro this quarter, rising against all of the 16 most-active currencies.
"We're headed for another round of the carry trade reversing,'' said Matthew Johnson, an economist at ICAP Australia Ltd. in Sydney. "There's plenty of risk in the banking system.''
The yen rose to 154.76 per euro at 10:40 a.m. in Tokyo, the highest since Aug. 22, compared with 155.40 late in New York yesterday. It also advanced to 114.08 against the dollar, the strongest since Aug. 22, from 114.27. Johnson said the yen is more likely to reach 112 than 117 in coming weeks.
The Australian and New Zealand dollars led the decline today, falling more than 1 percent versus the yen. Australia's dollar slid to 92.21 yen from 93.20 yen in New York yesterday, and New Zealand's dollar dropped to 78.82 yen from 79.72 yen.