Yen Rose Among Renewed Fear About Credit Market Losses

The yen rose against the 16 most traded currencies as stock analysts cut their ratings on Citigroup Inc., renewing concern credit-market losses will spread and prompt investors to exit bets funded by loans in Japan.

The Japanese currency advanced for the first time in a week versus the euro, and erased earlier losses against the dollar. The currencies of Australia, South Africa and New Zealand fell the most. These nations have been favored destinations for investors in the carry trade, which involves borrowing funds at low rates in other countries and buying higher-yielding assets elsewhere.

The yen advanced 1.1 percent to 165.40 per euro at 4:02 p.m. in New York, the most since Sept. 7. The Japanese currency rose 0.7 percent to 114.57 per dollar, the most since Oct. 19, after earlier falling to as low as 115.93. The yen fell the most in six weeks against the euro yesterday after the Federal Reserve cut its benchmark interest rate a quarter-percentage point to 4.5 percent.

The Japanese currency extended gains after a report showed manufacturing in the U.S. slowed more than forecast last month.

Yen Rose Among Renewed Fear About Credit Market Losses, Bloomberg
11/1/2007 1:45:55 PM