Yen Rises Versus Euro

The yen rose to a five-week high against the euro, and the dollar gained, as the U.S. payrolls report showed the biggest job losses in 34 years, increasing the haven appeal of the currencies.

Japan’s yen was headed for a fifth weekly gain versus the dollar, its longest rally since December 2004, as speculation rose that the Federal Reserve will cut borrowing costs to near zero this month. Russia’s ruble tumbled as crude oil fell to the lowest since December 2004. Brazil’s real rose from a three-year low after the central bank bought the currency to stem a rout.

The euro fell 0.4 percent to 117.35 yen at 2:01 p.m. in New York, from 117.85 yesterday. It touched 115.90, the lowest since Oct. 28. The U.S. currency rose 1 percent to $1.2657 per euro from $1.2777. The dollar was little changed at 92.30 yen after reaching 91.60, the lowest since Oct. 24.

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, climbed 1 percent to 87.29. It touched 88.463 on Nov. 21, the highest since April 2006.

Canada’s currency slid as much as 1.9 percent to C$1.3007 per U.S. dollar, the weakest since Oct. 28, after the national statistics bureau reported the economy lost 70,600 jobs last month, almost triple the median forecast of 21 economists in a Bloomberg News survey.

The loonie was headed for a 4.4 percent drop this week as crude oil for January delivery headed for its biggest weekly drop since 1991 and Prime Minister Stephen Harper suspended Parliament to save his minority government. Commodities generate a third of Canada’s export revenue.

Russia’s ruble slid as much as 1.7 percent to 28.2766 per dollar today, the weakest level since February 2006. The central bank widened the currency’s trading band for a fourth time in a month as the price of Urals crude oil, the country’s main export, fell below $40 a barrel.

The real rose 1.8 percent after the Brazilian central bank bought reais and sold currency-swap contracts after earlier dropping as much as 4.5 percent to 2.6202 per dollar, the weakest level since April 2005.

The yen rose 2.7 percent to 10.87 versus the krona and 1.4 percent to 8.84 against the South African 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 12 percent in South Africa. Sweden’s Riksbank cut its rate by 1.75 percentage points to 2 percent yesterday.

Japan’s currency was headed for a 3.7 percent increase against the euro and a 3.6 percent gain versus the dollar this week. The yen has risen 21 percent against the greenback and 39 percent versus the euro this year.

The euro fell versus the dollar as Germany’s Economy Ministry reported that manufacturing orders slumped in October more than forecast, dropping 6.1 percent after being adjusted for seasonal swings and inflation. It’s the 10th decline in the past 11 months., Bloomberg
12/5/2008 11:20:15 AM