Yen Rises

The yen rose against the euro for the first time in three days and gained versus the dollar on bets a drop in stocks will reduce purchases of higher-yielding assets funded by low-cost loans in Japan's currency.

The yen gained 1.6 percent to 122.93 per euro at 2:38 p.m. in New York, from 124.95 yesterday. Japan's currency traded at 97.84 per dollar, compared with 98.The yen gained 2.4 percent to 44.01 versus the real and 3.4 percent to 9.46 against the rand as the drop in stocks discouraged trades in which investors get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.3 percent target lending rate compares with 13.75 percent in Brazil and 12 percent in South Africa.

The pound dropped to a record against the euro as U.K. home sales declined to the lowest in at least three decades. The pound fell as much as 0.6 percent to 82.15 pence per euro, the weakest level since the 15-nation currency began trading in 1999, after the Royal Institution of Chartered Surveyors said U.K. home sales declined in the quarter through October to the lowest in at least three decades. Sterling fell 1.1 percent to $1.5433.

The ruble fell the most in two months versus the dollar-euro basket after Russia's central bank loosened its defense of the currency. The ruble declined 1 percent to 30.7016 versus the dollar- euro basket that the Russian central bank uses to manage the ruble's fluctuation. Bank Rossii widened its range on the ruble against a basket of dollars and euros by 30 kopeks (1 cent) to increase the currency's ``flexibility'' and lifted its benchmark refinancing rate to 12 percent from 11 percent to arrest outflows, according to separate statements after the stock market closed. Russia's currency depreciated 1.8 percent to 27.5353 against the dollar and 0.3 percent to 34.5782 versus the euro. The ruble basket consists of about 55 percent dollars and 45 percent euros.

The euro fell versus the dollar on increased speculation that the European Central Bank will reduce its 3.25 percent rate in the first quarter of next year to kickstart economic growth. The common currency dropped 1.4 percent to $1.2572 from $1.2748.

Canadian dollar dropped for a second day against its U.S. counterpart on concern that lower commodity prices will hobble the nation's economy. The Canadian currency weakened as much as 1.3 percent to C$1.2097 versus the U.S. dollar, the lowest since Nov. 3, from C$1.1943 yesterday. It traded at C$1.2046 at 2:05 p.m. in Toronto. One Canadian dollar buys 83 U.S. cents.,
11/11/2008 11:57:07 AM