Yen Rises to 1 1/2-Year High Against Dollar


The yen rose to a 1 1/2-year high against the dollar as a slump in Asian stocks prompted investors to cut holdings of higher-yielding assets bought with money borrowed in Japan.

Japan's currency climbed to the highest in almost two months against New Zealand's dollar, a favorite target of the so-called carry trade, on speculation HSBC Holdings Plc will this week announce losses stemming from bad U.S. home loans. The yen gained to a more than two week-high versus the euro as Asian stocks fell for a third day.

The yen traded at 110.51 per dollar at 9:55 a.m. in Tokyo and touched 110.22, the highest since May 2006, from 110.69 late in New York Nov. 9. It was at 162.32 per euro from 162.48 late last week. Trading volumes in Asia may be less than normal as today is a public holiday in the U.S.

Japan's currency advanced 0.9 percent to 99.99 per Australian dollar and reached 99.54, the strongest since Oct. 22. Against New Zealand's currency, the yen strengthened 0.7 percent to 83.97 and touched 83.38, the highest since Sept. 18.

The yen gained against all of the 16 most-actively traded currencies after the Daily Telegraph reported HSBC, Europe's largest bank by market value, is set to announce $1 billion of bad debts stemming from its U.S. mortgage business this week. The U.K. newspaper didn't cite the source of its information in the Nov. 11 report on its Web site. Gareth Hewett, a Hong Kong- based HSBC spokesman, declined to comment.

The yen has risen 7.2 percent against the dollar this year and cut its losses versus the euro to 2.9 percent as concerns the housing slump in the U.S. is deepening prompts investors to repay loans in Japan. The world's biggest banks have written down at least $40 billion as prices of mortgage-related assets plummeted.


Bloomberg
11/11/2007 6:17:19 PM