Yen Rises

The yen rose against the euro as drops in consumer spending and durable-goods orders prompted speculation investors will sell higher-yielding assets and pay back low-cost loans in Japan’s currency.

The dollar gained versus the euro for the first time in four days as evidence the U.S. recession is deepening led investors to take refuge in government debt. The yen had its biggest gain against the South African rand and Brazilian real among major currencies on bets carry trades will unwind.

The yen strengthened 1.1 percent to 123.04 per euro at 8:39 a.m. in New York, from 124.43 yesterday. The U.S. dollar fell 0.1 percent to 95.10 yen from 95.22. The euro fell 1 percent to $1.2933 from $1.3064. The pound declined 1.4 percent to $1.5251.

The ICE’s Dollar Index, which tracks the greenback against the euro, the yen, the pound, the Canadian dollar, the Swiss franc and Sweden’s krona, rose to 85.583 from 85 yesterday. The index climbed to 88.463 on Nov. 21, the highest level since April 2006.

South Africa’s rand tumbled 1.3 percent to 9.5594 yen while the Brazilian real slumped 1.3 percent to 40.5582 on bets investors will unwind trades in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Japan’s target lending rate of 0.3 percent compares with 12 percent in South Africa and 13.75 percent in Brazil.

Japan’s currency remained higher after China’s central bank slashed its key interest rate by the most in 11 years to 5.58 percent to prevent an economic slump.,
11/26/2008 6:46:32 AM