Yen Heads for Third Weekly Advance on U.S. Recession Concern

By Stanley White and Jamie McGee

Nov. 21 (Bloomberg) -- The yen headed for third weekly gain against the dollar and the euro as a surge in U.S. jobless claims and a drop in manufacturing prompted bets investors will sell higher-yielding assets.

The yen was also poised for a weekly advance versus the New Zealand dollar and the British pound as U.S. lawmakers put off action on a bailout for the country's automakers and global stocks slumped, prompting a reduction in so-called carry trades. The Australian dollar pared its declines against the yen today after the Reserve Bank of Australia intervened and bought its own currency.

``Money is flowing back to funding currencies like the yen,'' said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co. Ltd., a unit of Japan's largest brokerage. ``It's difficult to change the trend of stock declines pushing up the yen. Until we reach a conclusion on U.S. automakers, risk is off the table.''

The yen traded at 93.66 per dollar as of 8:41 a.m. in Tokyo from 93.69 late yesterday in New York, on course for a 3.7 percent gain this week. Japan's currency was at 116.62 per euro from 116.68 yesterday and 122.39 on Nov. 14. The euro bought $1.2450, headed for a 1.2 percent weekly decline.

Democratic congressional leaders said yesterday they will delay action at least until next month on government support for General Motors Corp., Ford Motor Co. and Chrysler LLC as the three companies haven't yet made a case for the help.

``Without all the details, it's tough to get too excited,'' said Matthew Kassel, director of proprietary trading at ING Financial Markets LLC in New York.

The Standard & Poor's 500 Index plunged 6.7 percent yesterday after gaining as much as 1.7 percent.

First-time claims for U.S. unemployment insurance unexpectedly rose last week to the highest level since 1992, the Labor Department reported yesterday. Manufacturing in the Philadelphia region shrank in November at the fastest pace in 18 years, the Federal Reserve Bank of Philadelphia said.

To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net; Jamie McGee in New York at jmcgee8@bloomberg.net.

Last Updated: November 20, 2008 18:44 EST