Yen extends gains against dollar

Saturday July 11, 2009

LONDON: The dollar fell on Friday against the yen but rose against the euro as investors sought safe-haven currencies in the face of uncertain global recovery prospects and awaited quarterly company results. In afternoon London trade, the European single currency fell to 1.3927 dollars from 1.4024 dollars in New York late on Thursday. The dollar slid to 92.31 yen from 92.96 yen late Thursday. Many investors regard the dollar and yen as safe investments in times of economic uncertainty. The Japanese unit resumed its rally as investors digested disappointing news that the University of Michigan's US consumer confidence index plunged to 64.6 points this month from 70.8 in June, a far sharper fall than had been expected. "The clear winner has been the yen," said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ in London. "It is the only major currency that has managed to advance against the dollar over the period since the equity markets in the US peaked on June 12. "Until sentiment shifts in the financial markets, the likelihood is that yen appreciation could persist." Added Lloyds TSB Corporate Markets analysts in a note: "The markets will also be watching the progression of the second-quarter US earnings season." Meanwhile the Group of Eight (G8) meeting in Italy drew to a close with little impact on foreign exchange market sentiment. Elsewhere, Japanese Economic and Fiscal Policy Minister Yoshimasa Hayashi said that the yen's rise posed a threat to Japanese exporters. "For this reason, we need to keep monitoring moves in the stock and currency markets closely," he told reporters. Markets are watching official Japanese comment carefully for any signs that Tokyo may be considering intervening in the market to curb the yen's rise, although analysts say it is unlikely to make a move at current levels. Traders were also pondering data showing that Japanese wholesale prices dropped by a record 6.6 percent in June from the previous year, deepening concerns that the economy is heading into another bout of deflation. In London trade on Friday, the euro was changing hands at 1.3927 dollars against 1.4024 dollars late on Thursday, 128.50 yen (130.42), 0.8605 pounds (0.8580) and 1.5124 Swiss francs (1.5120). The dollar stood at 92.31 yen (92.96) and 1.0862 Swiss francs (1.0779). The pound was at 1.6181 dollars (1.6341). On the London Bullion Market, the price of gold rose to 913 dollars an ounce at the fixing from 911.75 dollars an ounce late on Thursday. (AFP)