Yen Weakens as Carmaker Loans Cut Demand for Currency as Haven

[Enivid]

The yen weakened against the euro and the dollar as Japanese exports tumbled and U.S. government aid to General Motors Corp. and Chrysler LLC reduced demand for the currency as a haven.

The yen dropped to the lowest level versus the dollar in almost a week after Bank of Japan Governor Masaaki Shirakawa said the nation’s exports may decline further because of the yen’s strength and the global slowdown. Exports plunged by a record in November. The dollar weakened against the euro before data this week that may show U.S. consumer spending, home sales and durable goods orders declined.

“People have been encouraged to put in a bit more of the risk trades and that’s taking the top off some of the yen gains,” said Jeremy Stretch, senior market strategist in London at Rabobank International, the third-biggest Dutch lender. “They are also assessing the state of the economy and asking if the big moves we’ve seen in the yen are justified.”

The yen dropped 2.1 percent to 126.30 per euro at 9:22 a.m. in London from 124.22 on Dec. 19, paring its gain this year to 28 percent. The currency declined to 89.76 against the dollar from 89.31 late last week. It reached 90.23, the lowest level since Dec. 16.

The dollar weakened 1.1 percent to $1.4067 per euro from $1.3912 on Dec. 19. It slid to $1.4719 on Dec. 18, the weakest level since Sept. 25. The U.S. currency was little changed at $1.4913 versus the British pound from $1.4920.

From Bloomberg News.