Yen Set for Biggest Gains in 10 Years


The yen headed for its biggest weekly gain in a decade against the dollar as the global stock- market rout caused investors to sell higher-yielding assets funded with the Japanese currency.

The yen was also set to rise versus the euro by the most in any week since the common currency's debut as the Dow Jones Stoxx 600 Index tumbled 5.9 percent and Japan's Nikkei 225 Stock Average had its second-biggest drop on record.

The yen rose to 99.255 per dollar at 8:15 a.m. in New York from 99.82 yesterday, up about 6 percent on the week. It touched 97.92, the strongest since March 19. Japan's currency was also at 134.734 per euro, from 145.11, heading for the largest weekly gain since 1999. Earlier, the yen reached 132.83, the strongest since July 2005.

The Japanese currency surged 24 percent versus the Australian dollar, 18 percent against New Zealand's currency and 8 percent against the euro this week as traders reversed so-called carry trades. In such transactions, investors get funds in nations such as Japan that have low borrowing costs and buy assets where returns are higher. Japan's benchmark rate is 0.5 percent, compared with 6 percent in Australia and 7.5 percent in New Zealand.

The euro
headed for a second weekly loss against both the dollar and the yen on speculation the credit crisis in Europe will deepen, prompting the European Central Bank to cut interest rates. The bank lowered its benchmark rate two days ago for the first time in five years. The euro fell to $1.3570, from $1.3604, on course for its second weekly decline versus the dollar. The common currency has fallen 7.4 percent versus the yen this week, the most since the euro's debut in 1999. ECB policy makers said yesterday they expect the region's economic growth will remain weak for some time.

British pound slid to the lowest level in almost five years against the dollar as stocks plunged amid deepening concern the credit crisis will send the economy into a recession. The pound declined to $1.6792, the lowest since November 2003, before trading at $1.702 as of 1:25 a.m. in London. The currency was set for the largest weekly slide against the dollar since September 1992.

Canada's dollar
fell for a seventh day on speculation global credit market losses will deepen, encouraging investors to take refuge in the U.S. dollar. The Canadian dollar dropped 0.7 percent to C$1.1585 per U.S. dollar at 7:23 a.m. in Toronto, from C$1.1501 yesterday. One Canadian dollar buys 86.32 U.S. cents.

Australia's currency
plunged this week by the most since it began trading freely in December 1983 as stocks slumped worldwide, prompting investors to cut holdings of higher-yielding assets funded with loans in Japan. The Australian dollar declined 20 percent against the yen and New Zealand's dollar lost 16 percent as global equities erased more than $8 trillion in market worth this month.

The Australian dollar fell to 65.41 yen as of 5:02 p.m. in Sydney from 81.48 yen a week ago in New York. It traded at 66.26 U.S. cents from 77.40 on Oct. 3, a loss of 14 percent for the week. The New Zealand currency declined to 58.74 yen from 69.76 on Oct. 3 and dropped 10.3 percent this week against the U.S. dollar to 59.38 cents.

India's rupee
tumbled to a record, leading declines in Asian currencies this week, as investors pulled money from stock markets amid concern a deepening credit- market crisis will push the global economy into a recession. The rupee traded at 48.385 per dollar at 3:12 p.m. in Mumbai, according to data compiled by Bloomberg. The currency fell as much as 4.4 percent from a week ago to 49.26, the biggest loss since March 1993.

Chinese yuan
posted its biggest weekly gain in more than a month versus against the dollar as the government said it will seek a stable currency as a global credit crisis roils financial markets. he currency traded at 6.8357 a dollar in Shanghai as of the 5:30 p.m. close in ...


TradingEconomics.com, Bloomberg.com
10/10/2008 5:34:42 AM