Yen rises as stocks fall; yuan drops

ASIAN CURRENCIES ROUND-UP

The yen rose against all but two of the 16 most-active currencies as stock markets in Europe fell, prompting investors to reduce so-called carry trades.

Japan's currency strengthened versus the euro before Germany pays 17.2 billion euros ($25 billion) in coupon and principal on government debt on February 15, according to data compiled by Bloomberg.

The yen climbed the most against the New Zealand dollar as Asian stocks pared gains. Sweden's krona rose against 14 of the major currencies as the nation's central bank unexpectedly increased interest rates.

The yen advanced to 156.15 per euro as of 9:23 a.m. in London, from 156.50 in New York yesterday. The currency was at 107.24 per dollar from 107.31.

The yen gained against the Australian and New Zealand dollars, favored by carry traders. The Japanese currency climbed 0.8 per cent to 84.17 against the New Zealand dollar and rose 0.7 per cent to 96.38 per Australian dollar.

The yuan dropped the most in a month, prompting speculation that the central bank is seeking to discourage investors from betting on appreciation in the currency.

The People's Bank of China may want to deter traders betting on gains by encouraging two-way fluctuations, said Nizam Idris, a currency strategist with UBS AG in Singapore. The currency also followed declines in the yen and the euro against the dollar during a one-week public holiday.

The yuan's loss came after the Group of Seven nations called for faster currency gains over the weekend to reduce global trade imbalances.

A stronger yuan has made Chinese goods more expensive in overseas markets just as demand slows. China's economy grew 11.2 per cent in the fourth quarter from a year earlier, slowing from an 11.5 per cent pace in the third quarter.

The yuan fell 0.2 per cent to 7.20 per dollar as of the 5:30 p.m. close in Shanghai, from 7.1840 on February 5, according to China Foreign Exchange Trade System.

It earlier shed as much as 0.6 per cent, the most since a dollar peg was scrapped in 2005. The central bank set a weaker reference rate for daily trading after the one-week Lunar New Year holiday.

Taiwan's dollar reached a 20 month- high as investors bought the island's assets on speculation economic growth will withstand global credit-market losses.

The Singapore dollar also climbed as stock markets in the region advanced after investor Warren Buffett offered to assume liabilities from the world's biggest bond insurers. Five out of the 10 most-actively traded Asian currencies strengthened today.

The Taiwan dollar rose 0.6 per cent to NT$31.688 per US dollar at 4:45 p.m. local time, according to Taipei Forex Inc. That's the strongest since May 17, 2006. The Singapore dollar gained as much as 0.3 per cent before trading at S$1.4173.