Yen Weakens as Gain in Asian Equities Spurs Demand for Yield

  

by Ron Harui

Aug. 20 (Bloomberg) -- The yen fell against the euro and the dollar as Chinese equities led Asian stocks higher, encouraging investors to buy higher-yielding assets.

Japan’s currency weakened versus all of its 16 major counterparts as Chinese stocks rebounded from yesterday’s plunge. The euro traded near a one-week high against the dollar on expectations Europe’s manufacturing and service industries contracted at a slower pace.

“Risk-taking sentiment is coming back, as reflected by gains in Asian equities led by China,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This is prompting buying of major currencies versus the yen. There’s also talk the Japanese are looking to buy foreign securities.”

The yen declined to 134.39 per euro as of 11:05 a.m. in Tokyo from 133.80 in New York yesterday. The currency dropped to 94.37 per dollar from 94.08. The euro was at $1.4231 from $1.4224. The pound traded at $1.6537 from $1.6529.

The Shanghai Composite Index jumped 2.9 percent and the MSCI Asia-Pacific Index of regional shares added 0.7 percent today, paring a 2.9 percent decline so far this week.

To contact the reporters on this story: Ron Harui in Singapore at Rharui@bloomberg.net
Last Updated: August 19, 2009 22:23 EDT