The U.S. currency earlier advanced against the euro and the yen on increased demand for dollar funding, reflecting the reluctance of banks to lend to each other amid a global credit crunch. The euro traded near a two-year low versus the yen on speculation European Central Bank President Jean-Claude Trichet will say the shortage of credit reduces the need for higher interest rates at a meeting today.
The dollar traded at $1.3991 per euro at 10:48 a.m. in Tokyo, from $1.4009 late yesterday in New York. It earlier rose as high as $1.3937. The currency was at 105.83 yen from 105.71 yen. The euro fell to 148.02 yen from 148.11 yen yesterday and compares with a two-year low of 147.04 yen reached Sept. 16.