Yen Falls as Sovereign Wealth Funds Bolster Market Confidence

The yen fell against 12 of the 16 most-active currencies on speculation sovereign wealth funds will step up acquisitions, restoring confidence in holding higher-yielding assets funded in Japan.

The currency declined the most against the South African rand and Australian dollar, favorites of so-called carry trades. Government of Singapore Investment Corp. said it will study taking part in UBS AG's 15 billion Swiss franc ($15 billion) fund raising. BP Plc, Britain's largest company by market value, said a Chinese sovereign fund bought a stake.

Japan's currency dropped to 160.26 per euro as of 1:52 p.m. in Tokyo from 160.04 in New York. It fell to 101.31 versus the dollar from 101.10. The euro traded at $1.5820 per dollar from $1.5832. It touched $1.5913 on April 10, the highest level since the European currency's debut in 1999.

The euro traded near a record high against the dollar as a German industry report will probably show rising investor confidence, bolstering the case for the European Central Bank to refrain from cutting interest rates.

Yen Falls as Sovereign Wealth Funds Bolster Market Confidence, Bloomberg
4/15/2008 6:53:24 AM