Dollar Falls Versus Yen


The dollar fell against the yen as reports showed U.S. construction of single-family homes dropped to a 26-year low and consumer confidence declined, increasing concern the world's largest economy is headed for a recession.

The yen appreciated versus the euro, the Australian dollar and the Norwegian krone as a slide in U.S. stocks encouraged investors to sell higher-yielding assets and pay back low-cost loans in Japan's currency. South Korea's won rebounded, following yesterday's biggest drop in a decade, on speculation the government will prop up confidence in financial markets.

The dollar decreased 0.5 percent to 101.06 yen at 10:03 a.m. in New York, from 101.57 yesterday. The greenback will fall below 100 ``easily,'' Eliasson said. The dollar traded at $1.3471 per euro, compared with $1.3456. The euro dropped 0.4 percent to 136.13 yen from 136.73 yesterday.

Japan's currency gained 0.2 percent to 70.03 against the Aussie today and 0.6 percent to 15.48 versus the krone on speculation investors will unwind trades in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent target lending rate compares with 6 percent in Australia and 5.25 percent in Norway.

Construction of single-family homes dropped 12 percent to a 544,000 annual rate, the Commerce Department said in Washington. Starts on all residential properties, including condominiums, slid to 817,000, below the median forecast of 74 economists surveyed by Bloomberg News.

The Reuters/University of Michigan preliminary estimate of October consumer sentiment fell to 57.5 this month from 70.3 at the end of September.

For the week, the yen fell against the euro for the first time since the period ended Sept. 19, dropping 0.7 percent. It declined 0.4 percent against the dollar after four weeks of gains. The dollar was little changed versus the euro this week.

India's rupee fell to a six-year low as the nation's benchmark equity index slid below 10,000 for the first time since June 2006, stoking concern capital outflows will quicken. The rupee weakened 0.8 percent this week to 48.8825 a dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. That is the lowest since June 2002. The currency's 10-week losing streak is the longest since December 2005.


TradingEconomics.com, Bloomberg.com
10/17/2008 7:33:22 AM