Yen at 3-week low, yuan advances

ASIAN CURRENCIES ROUND-UP

The yen fell against 14 of the 16 most-active currencies after the Reserve Bank of Australia raised interest rates, increasing investor appetite for purchases of higher-yielding currencies funded in Japan.

The currency slid to a three-week low against Australia's dollar as a decline in expectations for exchange-rate swings bolstered confidence in so-called carry trades.

The yen declined for a fourth day to 97.38 against the Australian dollar at 9:13 a.m. in London, after falling to the lowest level since January 15, from 96.91 late in New York. Against the dollar, the Australian currency was at 90.75 US cents, little changed from yesterday, when it reached 91.01 cents, the highest since November 9.

The yen slid to 107.23 per dollar from 106.71, falling as low as 107.22. It dropped to 158.40 per euro from 158.26, and fell 0.5 per cent to 85.12 versus the New Zealand dollar.

China's yuan rose versus the dollar on speculation central bank policy makers are allowing the currency to appreciate at a faster pace to stem inflation, aggravated by the nation's worst snowstorms in five decades.

The currency gained after the People's Bank of China set the reference rate for yuan trading at the highest since it ended a link with the US currency in July 2005.

The yuan traded at 7.1840 per dollar as of the 5:30 p.m. close in Shanghai, from 7.1884 yesterday, according to China Foreign Exchange Trade System. It has gained 1.7 per cent this year after rising about 7 per cent in 2007.

Government bonds rose, extending this year's gains, on speculation the central bank will hold off raising interest rates to support local growth as the US, the world's biggest economy, showed signs of slipping into a recession.

Taiwan's dollar rose beyond NT$32 to the US currency for the first time since June 2006 on speculation the island's interest-rate advantage over the US encouraged investors to bring money home.

The currency gained for a sixth day, the longest stretch since the start of October, as exporters converted overseas earnings before the Lunar New Year holidays.

The Federal Reserve cut its benchmark rate by 1.25 percentage points last month to 3 percent, pushing its benchmark below Taiwan's 3.375 percent. The Vietnamese dong had its best one-day gain this year.

Taiwan's currency gained 0.2 per cent to NT$32.01 against the US dollar as of 4 p.m. local time, according to Taipei Forex Inc. It earlier reached NT$31.994, the highest since June 5, 2006.

Markets in China, South Korea and Taiwan are closed February 6-8 for the Lunar New Year holiday. Singapore, Malaysia and Hong Kong are closed on February 7-8. Indonesia shuts on February 7. The peso advanced 0.4 per cent to 40.53 and the rupiah gained 0.1 per cent to 9,205, according to data compiled by Bloomberg.