Yen rises as Asian stocks decline

ASIAN CURRENCIES ROUND-UP

The yen rose against 14 of the 16 most-active currencies as Asian stocks fell for the first time this week, encouraging investors to reduce holdings of higher-yielding assets funded with loans in Japan.

The currency gained the most against the South African rand and the New Zealand dollar, two popular targets of so-called carry trades. The euro declined against the yen and fell from a record high against the dollar as European stocks also dropped.

The yen rose to 160.74 per euro at 8:20 a.m. in London from 161.01 in New York late yesterday. It traded little changed at 106.42 against the dollar. The euro fell to $1.5092 from $1.5120. Japan's currency may rise to as high as 158.50 a euro today, Nakayama said.

Japan's currency climbed to 14.1883 yen per rand from 14.3132 and to 86.38 yen against the New Zealand dollar from 86.92. The MSCI Asia Pacific Index declined 0.6 per cent to 148.58, halting a three-day, 4.1 per cent rally. The Dow Jones Euro Stoxx 600 Index, a benchmark for the euro region, slipped 0.5 per cent.

The yuan rose the most this year on speculation China will seek faster currency gains to slow inflation. It climbed 0.34 per cent to 7.1174 per dollar, compared with 7.1420 yesterday.

The yuan rose by the most since the end of a link to the dollar in 2005 as the People's Bank of China seeks to cool the fastest inflation in 11 years.

The yuan rose 0.4 per cent to 7.1133 per dollar as of 5:30 p.m. close in Shanghai, compared with 7.1420 yesterday, according to China Foreign Exchange Trade System. It earlier climbed to 7.1122, the highest since July 2005.

The yuan also strengthened as some Asian currencies including South Korean won rose after Federal Reserve Chairman Ben S. Bernanke signaled the US central bank is prepared to lower its 3 per cent interest rate to shore up a faltering economy.

The Thai baht and South Korean won led Asian currencies higher as the US dollar tumbled, spurring exporters to convert overseas profits to protect earnings.

The baht is poised for the best month in almost two years and advanced to the highest since August 1997, reducing the profits earned by Thai Union Frozen Products Pcl and other exporters received from sales overseas.

Thailand "can't go against" the trend for a weaker dollar, central bank Assistant Governor Duangmanee Vongpradhip said yesterday.

The onshore baht rose as much as 0.3 per cent to 31.99 per dollar, the highest since August 21, 1997, and traded at 32.01 as of 3:39 p.m. in Bangkok, according to data compiled by Bloomberg. The currency has gained 5 per cent this year, the best performer of Asia's 10 most-traded currencies outside Japan.

The dollar traded near a record low against the euro on speculation the Federal Reserve will keep cutting interest rates to bolster economic growth, reducing the appeal of assets denominated in the currency.

Thailand's Finance Minister Surapong Suebwonglee said today the government will make a decision "soon" on whether to lift restrictions on capital entering the country.