Japan's currency also climbed this week against the Australian and New Zealand dollars on speculation a Group of 20 nations summit starting today will fail to reach a consensus on resolving the credit crisis. The euro headed for a weekly drop before a government report that may show a second quarter of contraction in the 15 nations sharing the currency.
The yen strengthened to 97.03 per dollar as of 8:56 a.m. in London, from 97.68 yesterday in New York. Against the euro, it climbed to 123.27 from 124.78. The euro fell to $1.2705 from $1.2769. The pound was at $1.4884 from $1.4841. The yen may rise to 95 against the dollar and 119 versus the euro by yearend, Hettinger predicted.
The yen typically rises when demand falls for so-called carry trades, where investors borrow in currencies with low interest rates and buy assets in nations with higher rates. Benchmark rates are 0.3 percent in Japan, 1 percent in the U.S., 5.25 percent in Australia and 6.5 percent in New Zealand.
Japan's currency gained to 63.35 yen per Australian dollar from 65.07 yesterday. It also advanced to 54.43 yen versus the New Zealand dollar from 55.81.
The yen rose 1.4 percent versus the dollar this week, its biggest gain since Oct. 24. It advanced 1.5 percent against the euro, 4.3 percent versus the Australian dollar and 6.3 percent versus the New Zealand dollar this week.
Leaders of G-20 countries gather in Washington to debate proposals ranging from curbing executive pay and restraining hedge funds to raising capital requirements for banks after financial institutions worldwide lost $958 billion on securities tied to U.S. mortgages.
The euro fell 0.6 percent this week against the yen, while the pound slid 5 percent versus the greenback on growing evidence policy makers in Europe and the U.K. will lower borrowing costs.