Yen posts biggest advance in decade as carry-trade evaporates

October 11, 2008 by · Leave a Comment
Filed under: Global News 

The yen rose against the euro and posted its biggest weekly gain in a decade against the dollar as a global stock rout prompted investors to sell higher-yielding assets and pay back low-cost loans in Japan.

Japan’s currency rallied the most versus the 15-nation euro in any week since its debut in 1999 as an 18 percent drop in the Standard & Poor’s 500 Index discouraged carry trades. President George W. Bush said the U.S. is working with global partners to solve the financial crisis as Group of Seven finance ministers and central bankers met in Washington.

“Investors are concerned it could get worse,” said JensNordvig, a currency strategist at Goldman Sachs Group Inc. in New York. “Clearly a lot of investors have only one goal, to preserve capital.”

The yen advanced 0.8 percent to 134.79 per euro at 4:21 p.m. in New York, from 135.83 yesterday, increasing 7.1 percent this week and touching 132.24, the strongest level since June 2005. The yen dropped 0.8 percent to 100.58 per dollar from 99.82 after reaching 97.92, the strongest since March 19. The euro fell 1.6 percent to $1.3392 from $1.3604 and was down 2.8 percent for the week.     

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