The Japanese yen advanced versus all 16 of the most-active currencies and reached a three-week high against the euro as investors reduced so-called carry trades. The dollar fell to an all-time low versus the euro after the G-7 communique failed to address the currency's decline following an Oct. 19 gathering in Washington.
The statement will ``make the foreign-exchange market sensitive to the global slowdown,'' said Toru Umemoto, chief currency strategist at Barclays Capital in Tokyo. ``The yen is likely to appreciate due to a decline of global equity prices, in particular emerging market equity prices.''
The yen rose to 113.54 a dollar, the strongest since Sept. 11, before trading at 113.71 at 8:05 a.m. in Tokyo from 114.51 late Oct. 19 in New York. It also climbed to 162.66 per euro, the highest since Sept. 26, before trading at 162.98, from 163.79. The dollar fell to $1.4347 per euro, the lowest since the European currency was formed, before trading at $1.4332, from $1.4301 on Oct. 19.
Japan's currency may rise as high as 109 a dollar by year- end, Umemoto said.
The yen advanced the most against the New Zealand dollar and South Africa's rand, popular targets of carry trades. It rose to 84.54 against versus New Zealand's dollar, the highest since Sept. 25, from 85.60 on Oct. 19. It also climbed to 16.6341 versus the rand from 16.8159.