Yen Declines Against Euro

The yen fell against higher-yielding currencies after governments in the U.S., Europe and Australia pledged to support banks, encouraging investors to increase holdings of euros, British pounds and Australian dollars.

The yen headed for a record decline against the Australian dollar after Prime Minister Kevin Rudd allotted A$10.4 billion ($7.3 billion) in spending for home buyers, families and pensioners. The U.S. Treasury will buy stakes in banks including Citigroup Inc. and JPMorgan Chase & Co., people briefed on the plan said. European countries committed $1.8 trillion to guarantee bank loans and invest in lenders yesterday.

The yen
, which declined against all 16 major currencies tracked by Bloomberg, fell to 139.84 per euro at 10:41 a.m. in London, from 138.57 yesterday in New York, on course for its first back-to-back decline since Sept. 25. Against the dollar, the yen dropped to 102.32 from 102.01. The euro rose to $1.3669 from $1.3581. The pound advanced to $1.7540 from $1.7341.

Against the Australian dollar, the yen plunged to 72.63 from 67.57 late yesterday in Asia. Japan's currency fell 4.3 percent versus the New Zealand dollar to 63.84. South Korea's won climbed 2.9 percent to 11.8065 versus the yen.

Japan's currency has gained 16 percent versus the Australian dollar and 12 percent against the New Zealand dollar this month as credit-market losses prompted investors to sell higher-yielding currencies. Japan's benchmark rate is 0.5 percent, compared with 6 percent in Australia and 7.5 percent in New Zealand.

Britain's pound rose against the euro and dollar as U.K. stocks advanced for a second day after the government bailed out three of the country's major banks. The pound advanced to 78.11 pence per euro by 11:22 p.m. in London, rising for a third day, from 78.31 yesterday. Against the dollar, the U.K. currency climbed to $1.7590 from $1.7341.

The Australian dollar headed for a record gain against the yen as governments worldwide pledged to stabilize financial systems. New Zealand's currency also rose.

The Australian dollar
surged 7.7 percent, the most since it began trading freely in 1983, to 72.78 yen at 5:05 p.m. in Sydney from 67.57 yen late in Asia yesterday. The currency jumped 5.5 percent to 70.92 U.S. cents, from 67.24 cents yesterday. That extended its two-day advance to 7.4 percent.

New Zealand dollar advanced 4.5 percent to 63.67 yen. The kiwi dollar, as it's called, gained 2.6 percent to 62.21 U.S. cents from 60.65 cents late in Asia yesterday.

Chinese yuan fell against the dollar, after yesterday climbing for the first time in four days, on speculation the government will favor a stable currency to help exporters weather a slump in global demand. The yuan dropped 0.19 percent to 6.8390 a dollar as of 5:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System. It yesterday gained 0.15 percent, after sliding 0.28 percent in the previous three days.

India's rupee
rose for a second day as stocks advanced on speculation plans by the U.S. and European governments to buy stakes in banks will prevent a credit-market collapse and spur demand for local assets. The rupee rose 0.4 percent to 48.08 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg.

Russia's ruble
strengthened against the central bank's dollar-euro basket as stocks climbed and the price of oil rose for a second day. The managed currency advanced to as high as 30.3563 versus the basket, from 30.4084 yesterday, and was at 30.3708 by 10:45 a.m. in Moscow.,
10/14/2008 5:10:28 AM