Yen dips against 16 top currencies

The yen fell against all 16 most active currencies as gains in stocks and commodities spurred traders to buy higher-yielding assets with loans made in Japan.

The yen dropped the most versus the South African rand and the Canadian and Australian dollars as gold rose to within 2 US cents of a record, oil traded close to $100 a barrel and zinc surged to a six-week high. Investors resumed so-called carry trades as equities in Europe and Asia climbed on speculation US banks will provide bond insurer Ambac Financial Group with $3 billion in new capital as part of a rescue plan.

"The equity positive story is getting investors to look at carry trades again,'' said Adrian Schmidt, a London-based senior foreign-exchange strategist at Royal Bank of Scotland Group, the fourth-largest currency trader.

The yen fell to 107.79 against the dollar at 10:58 am in London, from 107.17 on February 22 in New York. It weakened to 159.70 a euro from 158.99. The euro traded at $1.4814 against the dollar, from $1.4827 on February 22, when it rose to $1.4863, the highest since February 1.

The rand strengthened versus 15 of the 16 most actively traded currencies tracked by Bloomberg even as Gold Fields, Africa's second-biggest gold producer, said it plans to cut as much as 13 percent of its South African workforce because of power shortages. The currency rose 0.4 per cent to 7.6962 per dollar and 1.1 per cent to 14.0112 yen.

Yuan declines after China says growth may slow; bonds advance
The yuan declined the most in almost two weeks after a central bank report said China's growth may slow this year on "domestic and global uncertainties.'' Bonds gained.

The currency dropped a second day, paring this year's 2.3 gain, as the fourth-quarter monetary policy report released after trading hours on February 22 said the US subprime crisis may hurt Asia's second-biggest economy.

The central bank needs to adopt policies to maintain "necessary'' economic growth while curbing inflation, the report said.

"Worries about global growth could slow down the currency's appreciation,'' said Jonathan Anderson, chief Asia economist at UBS AG in Hong Kong.

The yuan fell 0.15 per cent to 7.1522 a dollar at the 5:30 pm close in Shanghai, from 7.1418 on February 22, according to China Foreign Exchange Trade System. That is the biggest decline since February 13. The currency advanced about 7 per cent in 2007 and 16 per cent since a link to the dollar was scrapped in July 2005.

China's economy expanded more than 11 per cent for four straight quarters before the worst snowstorms in five decades cut output. The disruptions in January and February "might cause people to worry more about domestic growth margin,'' UBS' Anderson said.

Consumer prices rose 7.1 per cent from a year earlier in January, the most in 11 years. Taiwan dollar rises on inflows, won advances
Taiwan's dollar gained for a fifth day on optimism overseas investors will buy more local assets, betting the island's interest-rate advantage over the US will widen. The South Korean won rose.

The Taiwan currency added to six weeks of gains as Goldman Sachs Group said it may strengthen 3.6 per cent in a year to NT$30.25 against the US currency. Taiwan's central bank increased its benchmark rate to 3.375 per cent in December, while the US Federal Reserve has cut borrowing costs five times since September to 3 per cent.

"There are so many foreign fund inflows,'' said Yang Kung- yi, a currency trader at Shanghai Commercial & Savings Bank in Taipei. "The central bank isn't stopping the Taiwan dollar's advance now as it'll be in vain given the massive buying.''

The local dollar climbed 0.3 per cent to NT$31.388 as of the 4 pm close in Taipei, according to Taipei Forex. It earlier rose as much as 0.8 per cent and has gained 3.3 per cent this year.

The Taiwan dollar's advance last week to the highest level since June 2005 may help temper inflation by reducing the cost of goods Taiwan buys abroad, Goldman said in a report today. The central bank may increase its benchmark rate again in March to rein in rising prices, the New York-based investment bank said.

Taiwan's core consumer prices, which exclude vegetables, fruits, fish and energy, rose 2.71 per cent in January from a year earlier, the fourth month price gains exceeded 2 per cent. The government needs to "pay attention'' to price trends, Wu Chao-ming, a government statistics official, said February 5.