Yen rises on worsening credit mart

ASIAN CURRENCIES ROUND-UP

The yen rose against 12 of the world's 16 most-active currencies as widening credit-market losses spurred investors to reduce holdings of higher-yielding assets financed in Japan.

The currency gained against the Canadian dollar and the Norwegian krone as traders reduced so-called carry trades. American International Group Inc, the world's largest insurer by assets, said it may have underestimated a decline in the value of derivative holdings.

The yen rose to 155.16 per euro at 2:22 p.m. in Tokyo from 155.30 late yesterday in New York. It strengthened to 106.90 a dollar from 106.96. The euro traded at $1.4513 from $1.4519. The yen may advance to 95 per dollar by March 31, Kato forecast.

Japan's currency gained 0.3 per cent to 106.47 versus the Canadian dollar and 0.2 per cent to 19.36 against the Norwegian krone. The Bank of Japan's benchmark interest rate of 0.5 per cent compares with 7 per cent in Australia, 8.25 per cent in New Zealand, 5.25 per cent in Norway, 3 per cent in the US and 4 per cent in the euro region.

The South Korean won traded near the lowest level this month as widening credit-market losses prompted investors to reduce holdings of higher-yielding assets.

The won traded at 945.50 per dollar as of the 3 p.m. close in Seoul from 945.30 yesterday, according to Seoul Money Brokerage Services Ltd. The Philippine peso rose following a government report that showed exports increased more than economists expected.

The peso was at 40.75 versus the dollar in Manila, according to Bloomberg data . The currency is approaching an almost eight-year high of 40.275 reached on Feb. 4.

Malaysia's ringgit gained after the government said exports may increase at a faster pace this year on rising demand from China and the rest of Asia. The currency traded at 3.2378 per dollar, compared with 3.2430 late yesterday.

Thailand's baht rose to the highest level since August 1997 after the finance ministry said it will propose alternative measures to replace restrictions on foreign capital entering the nation.

The baht onshore is the best performer against the dollar this year of the 10 most-traded Asian currencies outside Japan, gaining 2.5 per cent as the Federal Reserve cut interest rates and Thai exporters converted overseas revenue.