The currency declined versus the Australian and New Zealand dollars on speculation carry trades will get a boost and Japan's central bank will sell the yen for the first time in four years to help exporters. South Africa's rand, Mexico's peso and Brazil's real advanced versus the dollar on reduced aversion to higher-yielding, emerging-market assets.
The yen slid 2.4 percent to 118.66 per euro at 11:12 a.m. in New York, from 115.92 yesterday, when it touched 113.64, the strongest level in more than six years. The yen fell 2.5 percent to 95.14 per dollar from 92.78. It reached 90.93 on Oct. 24, the strongest since August 1995. The euro dropped 0.2 percent to $1.2470 after touching $1.2330, the weakest since April 2006.
Japan's currency dropped 5.9 percent to 59.05 against the Aussie and 4.1 percent to 52.28 versus the New Zealand dollar on speculation investors will revive 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 3.75 percent in Europe, 6 percent in Australia and 6.5 percent in New Zealand.
Japan's currency has jumped 25 percent versus the euro, 42 percent against the Australian dollar and 36 percent versus the New Zealand dollar this month as the global credit crisis and a stock rout erased more than $12 trillion in equity value.
The Aussie appreciated 3.3 percent to 62.13 U.S. cents after touching 60.09 cents yesterday, the weakest level since April 2003. The Reserve Bank of Australia bought its currency for a third day to stem losses.
The real rose 4.1 percent to 2.1595 against the dollar, the peso advanced 1.7 percent to 13.2958 and the rand increased 2.9 percent to 10.6708 on demand for assets in emerging markets.