Yen Rises


The yen rose against the dollar as speculation U.S. lawmakers will fail to agree on a bailout for automakers cut demand for higher-yielding assets bought with funds borrowed in Japan.

The currency also gained against the Australian dollar and the South Africa rand as a deepening global economic slump spurred stock losses. A $700 billion U.S. financial stability package isn't intended to prevent General Motors Corp., Ford Motor Co. and Chrysler LLC from collapsing, Treasury Secretary Henry Paulson said in a House hearing yesterday.

The yen rose to 96.85 against the dollar as of 7:17 a.m. in New York from 97.03 yesterday. It may strengthen to 90 by March, Barrow said. The currency was little changed at 122.44 per euro. Against the dollar, the euro rose to $1.2645, from $1.2618. The pound slid 0.8 percent to $1.5079.

The Australian dollar fell 1 percent to 62.69 yen, while the New Zealand dollar declined 0.7 percent to 53.23 yen. The South African rand slid 1.5 percent to 9.3341 yen.

The yen is popular in carry trades, where purchases of higher-yielding assets are funded in nations with lower rates. Japan's benchmark rate of 0.3 percent compares with 3.25 percent in Europe, 5.25 percent in Australia, 6.5 percent in New Zealand and 12 percent in South Africa.

The yen has advanced 14 percent versus the dollar, 33 percent against the euro and 53 percent against the Australian dollar in the past three months as the global economy headed toward a recession. Nissan Motor Co., Japan's third-largest automaker, said profit in the second-half will go to ``zero'' because of lower sales in the U.S. and a stronger yen.


TradingEconomics.com, Bloomberg.com
11/19/2008 6:03:46 AM