Dollar Falls to Six-Week Low Against Yen

The dollar fell to a six-week low against the yen after a government report showed U.S. employers eliminated jobs last month at the fastest pace in 34 years, indicating a deepening recession

The greenback was headed for a fifth weekly drop, its longest stretch of losses since December 2004, as traders increased speculation that the Federal Reserve will cut borrowing costs to near zero this month.

The dollar dropped 0.5 percent to 91.78 yen at 8:50 a.m. in New York, from 92.23 yesterday. It touched 91.60, the lowest level since Oct. 24. The U.S. currency advanced 0.9 percent to $1.2662 per euro from $1.2777. The euro decreased 1.4 percent to 116.17 yen from 117.85.

U.S. payrolls dropped by 533,000 last month, after declining by 320,000 in October, the Labor Department said today in Washington. The median forecast of 73 economists surveyed by Bloomberg News was for a reduction of 335,000. The unemployment rate rose to 6.7 percent.

A larger-than-forecast 4.09 million fired workers received government unemployment checks in the week ended Nov. 22, the most since December 1982, the Labor Department said yesterday.

The European Central Bank delivered the biggest interest- rate cut yesterday in its 10-year history after the economic slump deepened and the inflation rate plunged. ECB policy makers lowered the main refinancing rate by 0.75 percentage point to 2.5 percent.

Some people are buying the yen because they view it as a relatively safe currency, Japanese Economic and Fiscal Policy Minister Kaoru Yosano told reporters at a briefing today. The currency has gained 21 percent against the dollar and 39 percent versus the euro this year.

The ruble dropped to near the lowest in three years against the dollar after Russia’s central bank widened the currency’s trading band as the price of Urals crude, the country’s main export, fell below $40 a barrel. Russia’s currency slid as much as 1.4 percent to 28.2031 per dollar today, the weakest level since February 2006. It dropped to 35.9480 per euro, the lowest since Oct. 2.

Russia’s central bank buys and sells foreign currency to keep the ruble within a target trading band, which is managed against a basket of dollars and euros. Policy makers have widened the corridor four times since Nov. 11.,
12/5/2008 7:01:57 AM