Updated at 2:14 p.m., Wednesday, June 20, 2007
Yen drops, nears four-year low against the dollar
Bloomberg News Service
TOKYO — The yen traded near the weakest in more than four years versus the dollar today on speculation the Bank of Japan will refrain from lifting the lowest borrowing costs among major economies.A weak yen means the buying power of Japanese tourists visiting Hawai'i is diminished when they convert their yen into dollars.
Japan's yen dropped yesterday after minutes from the BOJ's May meeting suggested interest rates will rise "gradually," encouraging investors to borrow the currency and buy higher- yielding assets elsewhere, in a practice known as the carry trade. A decline in U.S. stocks on rising bond yields may spill over into Asian equity markets, helping the yen cap its decline as risk appetite retreated.
"The BOJ is happy to leave the rates as they are, which are at an extremely low level," said Tim O'Sullivan, chief foreign exchange trader at Forex.com, a unit of online currency trading company Gain Capital in Bedminster, New Jersey. "It seems like smooth sailing for carry trades."
The Japanese currency traded at 123.49 per dollar and 165.55 against the euro at 6:12 a.m. in Tokyo. It reached 123.75 on June 18, the weakest since Dec. 12, 2002. The yen traded close to the record low of 166.12 set June 19 versus the 13-nation currency.
The yen also dropped 0.4 percent yesterday against the British pound to 246.30 and earlier touched 246.64. The Japanese currency also lost 0.4 percent to 93.90 per New Zealand dollar, and traded above 94 for the first time since October 1987. The yen has dropped against all 16 major currencies tracked by Bloomberg this year.
