Yen Falls as Rally in Stocks Spurs Higher-Yielding Currencies

Dec. 6 -- The yen declined against all 16 of the world's most-active currencies on speculation rising global stocks will encourage purchases of higher-yielding assets funded with loans in Japan.

The dollar was also near the strongest in almost three weeks against the euro after reports showed U.S. job growth and factory orders quickened.

``Investor sentiment has improved a bit,'' said Hideaki Inoue, chief manager of derivatives and fixed-income investment in Tokyo at Mitsubishi UFJ Trust and Banking Corp. ``They're showing some appetite for higher-yielding currencies.''

The yen fell to 162.40 per euro at 10:24 a.m. in Tokyo from 162.04 late yesterday in New York. It traded at 111.15 against the dollar from 110.89. The yen may drop to 111.50 per dollar and 162.50 per euro today, Inoue forecast. The U.S. currency was little changed at $1.4614 per euro, after reaching $1.4593 yesterday, the highest since Nov. 16.

The New Zealand dollar was the best performing currency against the yen after the nation's central bank Governor Alan Bollard said he expects to leave the benchmark interest rate at a record-high 8.25 percent for longer as increasing oil and food prices stoke inflation. New Zealand's dollar rose 0.6 percent versus the yen to 85.87.

Bollard's comments boosted the currency's status as a favorite for so-called carry trades, where investors buy higher- yielding assets with loans from places with lower interest rates such as Japan. The MSCI Asia Pacific Index of regional equities added 1.1 percent, setting a one-month high.