Yen Trades Near Three-Week High

The yen touched a three-week high against the dollar as reports showing a surge in U.S. jobless claims and a drop in manufacturing prompted bets investors will sell higher-yielding assets funded by low-cost loans in Japan.

The dollar fell 1 percent to 94.78 yen at 3:04 p.m. in New York, from 95.73 yesterday. It touched 94.29, the lowest level since Oct. 28. The U.S. currency dropped 0.1 percent to $1.2506 per euro from $1.2489 yesterday. The 15-nation euro decreased 0.8 percent to 118.65 yen from 119.55 yesterday.

The yen briefly erased its gain against the dollar and the euro as stocks rose on a plan in the U.S. Senate to bail out automakers. Japan's currency rebounded as equities fell after Democratic congressional leaders said they will delay action at least until next month on a compromise plan.

The yen increased 4.9 percent to 58.12 against the Australian dollar and 2.7 percent to 8.87 versus South Africa's rand on speculation investors will unwind carry trades, in which they 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 3.25 percent in Europe, 5.25 percent in Australia and 12 percent in South Africa.

The swiss franc slipped for a sixth day against the dollar to the lowest against level since July 2007 as the Swiss National Bank reduced its target for the three-month London interbank offered rate, or Libor, to 1 percent and promised a ``generous and flexible'' supply of francs. The Swiss currency touched 1.2242 against the dollar, the weakest level in almost a year and a half. The franc fell 0.9 percent to 1.5307 versus the euro.,
11/20/2008 12:51:49 PM