Yen Near 3-Year High as Stock Slump Spurs Carry Trade Reversal


The yen traded near a three-year high against the euro on speculation a slide in Asian stocks will prompt investors to reduce holdings of higher-yielding assets financed in Japan, known as carry trades.

The currency was also close to a six-month high against the dollar on concern global economic growth will slow as the credit crisis spreads. The British pound rose as Prime Minister Gordon Brown prepares a package that will include injecting capital into struggling banks.

Japan's currency traded at 137.73 per euro at 10:29 a.m. in Tokyo from 137.89 late in New York yesterday. It reached 135.05 on Oct. 6, the strongest since September 2005. The currency was quoted at 101.34 against the dollar from 101.47. It rose to 100.24 on Oct. 6, the highest since April 10. The euro bought $1.3592 from $1.3588.

Against the Australian dollar, the yen rose to 71.97 from 72.84 late yesterday in Asia. It also advanced to 63.29 per New Zealand dollar from 64.11.

The pound rose to $1.7514 from $1.7455 yesterday. It also advanced to 77.64 pence per euro from 77.87. Prime Minister Brown is compiling a bank rescue package after European Union leaders failed announce a unified response after talks over the weekend, three people familiar with the decision said.


TradingEconomics.com, Bloomberg.com
10/7/2008 7:58:34 PM