The yen climbed to a 13-year high against the dollar as the risk of a global recession prompted investors to slash carry trades, in which they fund purchases of higher-yielding assets with Japanese currency.
The yen also jumped against the euro after Belarus, Ukraine, Hungary and Iceland joined Pakistan in requesting at least $20 billion of emergency loans from the International Monetary Fund. Standard & Poor's Ratings Services yesterday threatened to cut Russia's debt ratings.
The yen rose to 95.45 per dollar, the highest level since 93.28 on Aug. 15, 1995, and traded at 95.50 at 12:37 p.m. in Tokyo from 97.31 late yesterday in New York. Against the euro, it climbed to 121.80 from 125.89. The euro bought $1.2768 from $1.2934.
The yen touched a post-World War II high of 79.75 against the dollar on April 19, 1995, prompting the Group of Seven nations to intervene that year by buying the greenback to stabilize currency markets. The G-7 is comprised of Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
The Australian and New Zealand dollars declined this week against the yen as investors sold higher-yielding assets on signs the economic slump is getting worse.
The currencies headed for their third weekly drop this month and Asian stocks tumbled, prompting investors to buy back yen they borrowed to purchase assets offering higher returns in Australia and New Zealand. The nations' dollars also weakened versus the U.S. currency as the price of commodities the countries export plunged on concern demand will fall.
Australia's dollar dropped 7.8 percent this week to 64.54 yen as of 12:14 p.m. in Sydney from 70 yen on Oct. 17 in New York. It reached 62.67 yen today, the lowest since August 2002. New Zealand's currency declined 7.9 percent for the week to 57.29 yen from 62.24 a week ago and fell to 55.63 yen, the weakest since September 2002. The Australian dollar traded at 66.36 U.S. cents from 68.88 cents in New York on Oct. 17, a drop of 3.6 percent. New Zealand's dollar bought 59.01 cents from 61.21, losing 3.6 percent for the week.
Australia's dollar has dropped 27 percent against the yen and 20 percent versus the U.S. dollar over the past month, the second-biggest losses among the 16 major currencies, as increasing signs of a global recession hammered stock and commodity prices.