honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser

Posted at 12:28 p.m., Monday, June 18, 2007

Japanese yen continues to weaken against dollar, euro

Advertiser Staff

TOKYO — The yen traded near a record low against the euro on speculation the Bank of Japan will refrain from accelerating interest-rate increases this year, prompting investors to buy higher-yielding assets funded by loans in Japan.

Japan's currency sank to the weakest in more than four years versus the dollar yesterday and a 15-year low versus the British pound as the nation's lowest interest rates among major economies encouraged the so-called carry trades.

The yen has weakened versus all 16 most-active currencies since the start of the year.

"The trend of yen weakness is going to continue," said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. "The pressure on the yen is increasing because the BOJ appears to be on hold until at least August."

The yen traded at 165.91 per euro and 123.67 per dollar at 6 a.m. in Tokyo. It declined 0.4 percent against the 13-nation currency yesterday when it touched an all-time low of 165.99. The Japanese currency also fell 0.2 percent versus the dollar and reached 123.75, the weakest since Dec. 12, 2002.

The yen may drop to 170 per euro and 125 per dollar by year- end, Malpede said. The yen has declined 5.3 percent versus the euro, 3.7 percent against the dollar and 5 percent versus the pound since the start of the year.

The Bank of Japan kept borrowing costs at 0.5 percent June 15 and signaled further increases will be gradual. It compares with 5.25 percent in the U.S., 5.5 percent in the U.K. and 4 percent in the euro zone.