Yen Advances

The yen rose to a three-month high against the euro as declines in stocks and concern financial firms will post more losses damped demand for higher-yielding assets funded by loans in Japan.

The yen also advanced versus the dollar, New Zealand dollar and the British pound as Asian and European stocks tumbled after JPMorgan Chase & Co. analysts said Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, may post $4 billion of credit writedowns. The euro fell to its weakest level against the dollar in six months as crude oil prices declined for a fourth straight day.

The yen climbed 0.5 percent to 161.01 per euro at 8:36 a.m. in New York, from 161.82 yesterday, after touching 160.87, the strongest since May 13. It advanced 0.3 percent to 109.83 per dollar, from 110.13. The euro fell 0.2 percent to $1.4661, from $1.4694, after reaching $1.4631, the lowest since Feb. 20.

Japan's currency rose 0.3 percent to 77.92 per New Zealand dollar and advanced 0.5 percent to 204.30 versus the pound as concern Lehman writedowns may deepen discouraged the carry trade, in which investors get funds in a country with low borrowing costs and invest where returns are higher. The Bank of Japan held its target lending rate at 0.5 percent today, the lowest among industrialized countries. It compares with 5 percent in the U.K. and 8 percent in New Zealand.

Yen Advances, Bloomberg
8/19/2008 6:16:30 AM