March 22 (Bloomberg) -- The dollar may strengthen against the euro and yen on speculation U.S. interest rates will rise at a faster pace than those in Europe and Japan.

Traders expect the Federal Reserve to raise rates at least twice more this year after 14 straight increases since mid-2004 to 4.5 percent. BOJ Governor Toshihiko Fukui said today the bank hasn't decided when to lift rates from zero percent. Industrial orders in the euro region fell by the most in almost nine years.

``The Fed continues to underpin the view that more rate hikes are highly probable, and yield premiums favor the dollar in the short term,'' said Jeremy Stretch, a currency strategist at Rabobank Groep in London.

The U.S. currency traded at t $1.2084 per euro at 7:06 a.m. in New York from $1.2095 late yesterday. It also traded at 117.10 yen from 117.27.

The dollar was little changed after Fed Chairman Ben S. Bernanke said late yesterday that the U.S. trade deficit, which widened to a record $726 billion last year, needn't cause a ``precipitous decline'' in the currency's value.

The U.S. currency initially declined after Bernanke said in a letter to Representative Brad Sherman that ``the possibility of a future disruptive correction of the U.S. trade deficit cannot be ruled out.'' Widening trade and current-account deficits sent the dollar lower against the euro and yen from 2002 to 2004.

In contrast with the Fed, the European Central Bank on March 2 raised its benchmark for the second time in three months to 2.5 percent. The BOJ has kept rates near zero percent since 2001.

http://www.bloomberg.com/news/markets/currencies.html

March 27 (Bloomberg) -- The dollar may fall as traders speculate Federal Reserve Chairman Ben S. Bernanke will signal the central bank is almost ready to stop raising interest rates, a Bloomberg survey shows.

Forty-three percent of the 51 traders, strategists and investors surveyed on March 24 from Sydney to New York advised selling the dollar against the euro this week. Forty-one percent said the U.S. currency will weaken versus the yen.

Bernanke will preside over his first Federal Open Market Committee meeting this week since succeeding Alan Greenspan in February. While 88 of the 90 economists surveyed by Bloomberg expect a quarter point increase to 4.75 percent tomorrow, traders are likely to sell the dollar unless the central bank voices concern about faster economic growth. Reports last week showed the biggest drop in new home sales in nine years and producer prices fell by the most in almost three years.

``Buy everything against the dollar,'' Greg Gibbs, a strategist at ABN Amro Holding NV in Sydney, said in an interview. ``I expect the FOMC statement to say further rate decisions will be data dependent, which will make the market less certain of rate hikes.''

The dollar rallied against the euro and yen last week, recovering from its steepest loss in two months. The U.S. currency strengthened 1.3 percent to $1.2036 per euro on March 24, paring this year's loss to 1.6 percent. The dollar rose 1.3 percent to 117.46 yen and is down 0.3 percent against the Japanese currency since December.

Bloomberg's weekly survey didn't anticipate the gain. The survey accurately predicted the dollar's direction in 28 of the past 52 weeks versus the euro and in 27 weeks against the yen. The U.S. currency has dropped this year against 12 of the 16 the most actively traded currencies tracked by Bloomberg.

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March 30 (Bloomberg) -- The euro advanced against the dollar for a second day on speculation the European Central Bank will raise interest rates at least three more times this year, outpacing the Federal Reserve and narrowing the U.S. rate gap.

The 12-nation currency may extend this year's 1.8 percent climb against the dollar after reports showed business confidence in Germany, Europe's biggest economy, rose to a 15- year peak and executive sentiment in Italy was at its highest in five years. The euro dropped almost 13 percent last year as the Fed raised rates eight times to the ECB's once.

``Propelled by an improvement in business confidence in Germany and elsewhere, investors are now pricing in three more rate hikes by the ECB, from two previously,'' said Hideki Hayashi, a foreign-exchange strategist in Tokyo at Shinko Securities Co., a unit of Japan's second-biggest lender. ``Those expectations are supporting the euro.''

The euro rose to $1.2057 as of 11:48 a.m. in Tokyo from $1.2024 late yesterday in New York. It was at 141.96 yen, from 141.66, a gain of 1.8 percent for the year. The euro may rise to $1.23 against the dollar in the coming month, Hayashi said.

The euro March 28 rose against the dollar and yen after a report showed business confidence in Germany unexpectedly jumped to 105.4 this month from 103.4 in February, the highest since April 1991. A separate report also showed Italian business confidence climbed to a five-year high.
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March 31 (Bloomberg) -- The yen may weaken after a government report showing consumer prices rose less than expected added to speculation the Bank of Japan won't raise interest rates more than once this year from zero percent.

Core consumer prices excluding fresh food, the Bank of Japan's preferred inflation measure, increased 0.5 percent in February from a year ago, compared with the median estimate of 0.6 percent in a Bloomberg News survey. The yen is heading for a quarterly gain against the dollar, ending four quarters of losses, as traders raised bets Japan would lift borrowing costs on prospects of faster inflation.

``Less-than-expected consumer prices triggered yen- selling,'' said Toru Tanaka, a senior manager of treasury and foreign exchange in Tokyo at Mitsubishi Corp., Japan's largest trading company. ``Expectations of BOJ rate increases had been excessively reinforced recently, with some investors even talking about a June hike. Today's data may correct that.''

Japan's currency traded at 117.34 per dollar as of 1:13 p.m. in Tokyo from 117.32 late yesterday in New York, a gain of 0.3 percent this year. It was at 142.70 versus the euro from 142.73. The dollar was at $1.2162 per euro from $1.2167.

The yen has dropped 8.7 percent against the dollar over the past year as Japanese investors sought higher yields abroad. It may fall to 119 against the dollar in one month, Tanaka said.

http://www.bloomberg.com/news/markets/currencies.html

April 4 (Bloomberg) -- Treasuries erased earlier gains on speculation China, the second-largest overseas holder of U.S. government securities, will reduce its holdings of the debt.

China should gradually cut its ownership of U.S. bonds and can stop purchases of dollar-denominated debt, Reuters reported a Hong Kong newspaper as saying, citing Cheng Siwei, vice chairman of the Standing Committee of China's National People's Congress. China owned $262.6 billion of U.S. Treasuries as of January 2006.
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April 4 (Bloomberg) -- The euro rose to a record against the yen and a two-month high versus the dollar on anticipation the European Central Bank will raise interest rates next month.

The 12-nation currency also got a boost after the United Arab Emirates, Qatar and Kuwait said they may add to holdings of euros in their almost $36 billion in reserves. The euro extended gains after exceeding $1.2208 for the first time since Jan. 27.

``There is likely to be more ECB tightening,'' said David Durrant, an investment strategist in New York at Julius Baer Investment Management, which manages about $38 billion. At the same time, ``the Middle East is going to keep diversifying their reserves.''

The euro climbed to $1.2255 at 5:04 p.m. in New York from $1.2139 late yesterday. The euro advanced to 144.04 yen, from 142.85 yesterday, after earlier reaching the strongest since the euro's January 1999 debut. The dollar fell to 117.54 yen, from 117.68 yen.

Durrant expects the euro to reach $1.24 in three months, its strongest since September.

ECB President Jean-Claude Trichet may signal the central bank is prepared to lift rates further when policy makers meet on April 6, traders said.

The Frankfurt-based central bank, likely to keep its key rate at 2.5 percent at this week's meeting, will increase borrowing costs to 2.75 percent in May, according to the median estimate of 40 economists surveyed by Bloomberg. Trichet will hold a press conference this week after the bank's decision.
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April 6 (Bloomberg) -- The euro rose to a record against the yen on speculation European Central Bank President Jean- Claude Trichet will signal after a meeting today that policy makers are prepared to add to two rate increases since December.

The euro yesterday also reached a two-month high versus the dollar as an index of service companies, which account for a third of the region's $9 trillion economy, showed growth held at a five-year high. Gains against the dollar were exacerbated as Federal Reserve Bank of Kansas City President Thomas Hoenig signaled U.S. policy makers are almost done raising interest rates. Japan has held rates near zero percent since 2001.

``Trichet will be hawkish and definitely say the European economy is in a position where rates will push north,'' said Luke Waddington, head of interbank currency sales in Tokyo at the Royal Bank of Scotland Plc. ``The euro will benefit.''

The euro climbed to 144.62 yen at 9:13 a.m. in Tokyo from 144.27 in late New York trading yesterday. Versus the dollar, it was at $1.2290 from $1.2289 yesterday, when it hit $1.2306, the highest since reaching a 2006 high of $1.2323 on Jan. 25.

The euro will reach $1.2350 and 145 against the yen this week, Waddington said.

All 40 economists surveyed by Bloomberg News said the ECB will keep rates unchanged today. Trichet will hold a press conference after the bank's decision.
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April 25 (Bloomberg) -- The dollar strengthened from a three-month low against the yen after reports showed sales of previously owned homes and consumer confidence unexpectedly increased.

The U.S. currency slumped earlier on expectations signs of slower growth would boost speculation the Federal Reserve is close to the end of its cycle of interest-rate increases.

``Both reports are sending the same message, that there is resiliency in the housing market and in the consumer,'' said Alan Ruskin, head of international currency strategy at RBS Markets Inc. in Greenwich, Connecticut. ``These indicators are friendly for the dollar.''

The U.S. currency strengthened to 114.88 yen at 12:28 p.m. in New York, from 114.65 yen yesterday. Versus the euro, the dollar traded at $1.2404 from $1.2388. It had fallen as low as $1.2440, the weakest since Sept. 9.

Home purchases increased 0.3 percent in March to an annual rate of 6.92 million, compared with 6.90 million in February, the National Association of Realtors said. Economists expected sales to fall to 6.66 million, based on the median forecast in a Bloomberg survey.

The report ``may damp speculation the Fed may pause,'' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. ``The Fed is very closely watching the housing market and if home sales start to stabilize they may be more likely to continue hiking rates.''

The Conference Board's confidence index rose to 109.6, the highest since May 2002, from 107.5 in March, the New York-based business group said today. Economists expected a decline to 106.2, based on the median forecast in a Bloomberg survey.
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May 6 (Bloomberg) -- Berkshire Hathaway Inc.'s Warren Buffett said he cut his foreign currency investments because there are better ways to hedge against a decline in the U.S. dollar.

Buffett, Berkshire's chairman and chief executive officer, told investors at the company's annual meeting in Omaha, Nebraska, that the $4 billion purchase of most of Israel-based toolmaker Iscar Metalworking Cos. represents another way of ``mitigating'' a fall in the dollar.

The Iscar acquisition, announced yesterday, would give Berkshire its first company based outside the U.S. Buffett who reduced his bet against the dollar in the first quarter to $5.4 billion from $13.8 billion in December, said Iscar gets most of its earnings in currencies other than the dollar.

``Buffett's saying, `There's no point in playing a weaker- dollar strategy in the currency market, I'd rather do it from longer-term foreign direct investments,''' said Samarjit Shankar, director of global strategy for the foreign exchange group at Mellon Financial Corp. in Boston.

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May 10 (Bloomberg) -- The dollar fell to its lowest in a year against the euro and an eight-month low versus the yen on speculation the Federal Reserve will signal today it may pause after raising interest rates for almost two years.

The U.S. currency has dropped 7 percent this year on a trade-weighted basis on concern rates in Europe and Japan will rise faster than in the U.S., reducing the appeal of dollar- denominated assets. The Fed will take a break until at least August after lifting rates at a 16th straight meeting today to 5 percent, said a majority of Wall Street's biggest bond dealers.

``It's a case of death by a thousand cuts for the dollar,'' said Richard Franulovich, a currency strategist at Westpac Banking Corp. in New York. ``There's a growing sense that the Fed is nearing the end of its tightening cycle,'' while the European Central Bank may raise rates, he said.

The dollar declined to $1.2792 per euro at 11:19 a.m. in New York from $1.2759 late yesterday. It reached $1.2813, the weakest since May 12, 2005. The dollar fell to 110.62 yen, from 111.04 late yesterday. The dollar earlier fell to 110.32 yen, the lowest since Sept. 16.

The dollar also weakened on anticipation the U.S. Treasury will raise pressure on China to let the yuan appreciate at a faster rate, even if it stops short of branding China a currency manipulator in a report to Congress today.

The U.S. currency fell to its lowest in a year today according to the U.S. Dollar Index, which measures the dollar's value against currencies of six major U.S. trading partners, including the euro and yen. The dollar has dropped 7.3 percent versus the euro and 6 percent against the yen this year.

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May 11 (Bloomberg) -- The dollar rose the most against the yen in six weeks and gained versus the euro as the U.S. Treasury stopped short of saying China manipulates its currency and the Federal Reserve suggested it may keep raising interest rates.

The Treasury yesterday left China off a list of countries accused of currency manipulation, two weeks after the Group of Seven industrial nations urged Asian countries to let their currencies trade more freely. The Fed yesterday increased its benchmark rate to 5 percent and said ``further policy firming may yet be needed.''

``The Treasury report was a touch softer in its language than might have been expected, and the Fed decision left open the possibility of more rate hikes,'' said Simon Derrick, chief currency strategist at Bank of New York in London. ``There's no way you can look at this and say it's not been dollar bullish.''

The U.S. currency rose to 111.25 yen at 10:50 a.m. in London from 110.49 in late New York yesterday, when it fell to the lowest since Sept. 14. Against the euro, it bought $1.2720 from $1.2784, after reaching $1.2833, the weakest since May 11, 2005.

Asian central banks may seek to limit currency gains to prevent their goods becoming more expensive in export markets. The U.S. dollar today advanced against 12 of the 15 Asian currencies Bloomberg tracks. Had the Treasury report branded China a manipulator, that might have fueled U.S. calls for sanctions against China.

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June 7 (Bloomberg) -- The dollar may strengthen for a third day against the euro and yen on speculation Federal Reserve speakers will heighten prospects the central bank will raise interest rates this month to contain inflation.

Fed Bank of Atlanta President Jack Guynn will speak about the U.S. economic outlook and housing markets today. The dollar yesterday gained the most in almost three weeks after Chairman Ben S. Bernanke expressed concern about inflation a day earlier, reducing the chance the Fed will pause its rate increases.

``Investors who had increased bets the Fed were done in May are now hurrying to buy back the dollar,'' said Yuji Saito, a currency dealer at Societe Generale SA in Tokyo. ``Any comments from Fed officials about inflation risk will raise expectations of higher rates, supporting the dollar.''

The dollar was at $1.2826 per euro at 9:06 a.m. in Tokyo, from $1.2833 late yesterday in New York, the biggest jump since May 17. The U.S. currency was at 113.13 yen from 113.32.

The dollar may rise to $1.2750 against the euro and 114 yen today, Saito said.

Bernanke told a June 5 conference in Washington that gains in measures of inflation are ``unwelcome,'' indicating the central bank may increase its key rate a 17th consecutive time on June 29. Federal Reserve Bank of St. Louis President William Poole yesterday told the Wall Street Journal the Fed should have an ``upside bias'' on rates. Guynn, a voting member of the policy-setting Federal Open Market Committee this year, will speak at 12:30 p.m. local time in Duluth, Georgia.
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June 12 (Bloomberg) -- The dollar gained against the euro for a sixth day, its longest rally since November, on speculation inflation reports this week will prompt the Federal Reserve to raise interest rates for a 17th straight time.

The U.S. currency extended its biggest weekly gain versus the yen in three months on anticipation Fed officials will reinforce in speeches this week the case for lifting borrowing costs. Core inflation ``exceeds my comfort level,'' Sandra Pianalto, president of the Fed Bank of Cleveland, said today.

``The hawkishness from the Fed on inflation has driven up expectations for interest-rate increases,'' said John McCarthy, a director of currency trading at ING Financial Markets LLC in New York. ``It is favorable for the dollar.''

The dollar advanced to $1.2596 per euro at 10:40 a.m. in New York, from $1.2639 late on June 9. The U.S. currency touched $1.2567, the strongest since May 2. The dollar climbed to 114.29 yen from 113.97, after a 2 percent rally last week. It is down 6 percent this year against the euro and 3 percent versus the yen.

Interest-rate futures show traders are pricing in an 86 percent chance the Fed will push rates to 5.25 percent on June 29, compared with 82 percent on June 9 and 38 percent on May 16.

``The core consumer price index has increased at an annualized rate of more than 3 percent during the past three months,'' Pianalto, a voting member of the Federal Open Market Committee this year, said in a speech in Florida. That rate, ``if sustained, exceeds my comfort level.''

http://www.bloomberg.com/apps/news?pid=10000103&sid=aFI.MotE.DsY&refer=us

July 11 (Bloomberg) -- The yen advanced against the dollar on speculation the Bank of Japan will raise interest rates this week, helping to lure investors to assets denominated in the currency.

The Japanese currency has risen against the dollar the past two weeks on anticipation the central bank will lift borrowing costs for the first time in six years on July 14. Investors anticipate any comments from policy makers on whether economic growth is strong enough to merit further rate increases.

``As the meeting approaches, we'll continue to see upward pressure on the yen,'' said Tim Fox, a currency strategist at Dresdner Kleinwort in London. ``The market is finding it tough to make a big move at the moment though as we're waiting to see what the BOJ has to say.''

The Japanese currency traded at 114.16 per dollar at 2:08 p.m. in New York, from 114.33 late yesterday. It was at 145.71 versus the euro, from 145.52. Versus the dollar, the euro strengthened to $1.2755, from $1.2730.

``The market is looking to see if BOJ will engage in a methodical, consistent raising of interest rates,'' said Boris Schlossberg, senior currency strategist at Forex Capital Markets LLC in New York. ``They will restrain in giving any guidance.''

Comments from Japanese Prime Minister Junichiro Koizumi today may also limit the currency's gains. He wants a quick decision on sanctions against North Korea, which fired seven missiles into the Sea of Japan on July 5, he said at a news conference in Tokyo.

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Aug. 10 (Bloomberg) -- The yen dropped to a record against the euro on speculation the Bank of Japan tomorrow will hold interest rates steady while the European Central Bank is likely to signal further increases.

Japan's currency has fallen for the past five days versus the euro on growing prospects for a widening rate differential with Europe. The Bank of Japan will probably put off increasing rates for a second month at a two-day meeting starting today. A German government report tomorrow may show faster inflation in July, reinforcing expectations of higher ECB rates.

``The widening gap in interest rates between Japan and Europe is pushing down the yen against the euro,'' said Masashi Kurabe, a foreign-exchange manager in Tokyo at Bank of Tokyo- Mitsubishi UFJ Ltd., a unit of Japan's biggest lender by assets. ``The yen will likely head south against the euro.''

The yen was at 148.49 per euro at 8:32 a.m. in Tokyo, after reaching 148.60, the lowest since the European currency's debut in January 1999, from 146.36 late in New York yesterday. It may fall to 150 per euro in one month, Kurabe said. Against the dollar, the yen was at 115.37 from 115.36 and the euro bought $1.2873 from $1.2862 yesterday.

BOJ Governor Toshihiko Fukui and his policy board will hold the bank's key overnight lending rate at 0.25 percent after raising it from near zero percent last month, the first increase in almost six years, according to all 29 economists surveyed by Bloomberg News. A decision is due tomorrow in Tokyo.

Prices in Europe's largest economy climbed 0.4 percent, double the 0.2 percent pace from a month earlier, a German government report tomorrow will show, according to a Bloomberg survey.

The ECB has lifted its main rate four times since the start of December, to 3 percent. The bank will release its monthly report in Frankfurt today, including comments on inflation trends.

``The short-term risks are for the euro to rise against the yen,'' said Sue Trinh, a currency strategist at RBC Capital Markets in Sydney. ``Further European Central Bank rate hikes are in the pipeline, while the Bank of Japan is taking a more cautions approach. We don't expect the BOJ to raise rates until the fourth quarter.''

The euro may reach 150 yen in the next few weeks, she said.

http://www.bloomberg.com/news/markets/currencies.html

Aug. 19 (Bloomberg) -- The dollar declined against the euro and yen this week as signs of slowing inflation and waning consumer confidence reduced expectations the Federal Reserve will raise borrowing costs again this year.

The U.S. currency also slumped against the Swiss franc, Swedish krona and South Korean won after government reports on easing producer and consumer inflation prompted traders to reduce bets on further Fed rate increases. Rising interest rates typically make dollar-denominated assets more attractive to international investors.

``The main driver of the dollar this week was tame inflation news,'' said Nick Bennenbroek, vice president of foreign exchange research at Brown Brothers Harriman & Co. in New York. ``We're reaching the end of the Federal Reserve's hiking cycle and that's going to be a negative for the dollar.''

Against the euro, the dollar dropped 0.8 percent to $1.2825. The U.S. currency slumped 0.4 percent to 115.80 yen. It's down 7.6 percent this year against the euro and 1.7 percent versus the Japanese currency.

A Labor Department report on Aug. 15 showed wholesale prices excluding food and energy fell 0.3 percent last month, the first decline since October. The agency said the next day that core consumer prices excluding food and energy rose 0.2 percent in July, the smallest increase since February.

Measures of U.S. consumer confidence and new home construction both weakened more than forecast, signaling slower growth. Housing starts fell 2.5 percent to an annual rate of 1.795 million, the lowest level since November 2004, the Commerce Department said Aug. 16. Building permits, a sign of future construction declined 6.5 percent, the most since September 1999.

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Aug. 29 (Bloomberg) -- The dollar declined on speculation an industry report today will show consumer confidence fell to the lowest this year, making it less likely the Federal Reserve will resume raising interest rates.

The U.S. currency is heading for its first monthly loss against the euro in three as traders bet the European Central Bank will raise its key rate twice more. The Fed broke a two-year cycle of rate increases this month in response to signs of slower growth and minutes of the meeting will be released today.

``There's downside risk to the data today, and that's a negative for the dollar,'' said Steve Barrow, chief currency strategist at Bear Stearns Cos. in London. ``Our view is the Fed will pause again in September.''

The dollar fell to $1.2806 per euro at 7:15 a.m. in New York, from $1.2779 late yesterday, poised for a 0.4 percent monthly decline. The U.S. currency also dropped to 116.80 yen, from 117.18, the biggest slide in two weeks. It was lower today against 14 of 16 major currencies tracked by Bloomberg.

The euro earlier reached a record against the yen as the Financial Times Deutschland reported the ECB has decided to raise its forecasts for growth and inflation in the region. The 12- nation currency then declined after Japanese Finance Minister Sadakazu Tanigaki told reporters he's closely watching the euro- yen rate. The euro reached 150.03 yen, the highest since its 1999 debut, before slipping to 149.58.

German consumer confidence climbed to 8.6 in August from 8.5 the month before, Gfk, a market-research company, said today. That's the highest since November 2001. The ECB will likely maintain its key rate at 3 percent this week after four increases since December. Futures traders are betting on two further moves before the end of the year to cool inflation as growth picks up.
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Oct. 6 (Bloomberg) -- The dollar posted the biggest gain since July against the yen and euro after a government report showed the U.S. jobless rate unexpectedly fell in September.

Evidence of quicker economic growth prompted traders to pare bets the Federal Reserve will reduce interest rates early next year, making dollar-denominated assets more attractive to international investors.

``The labor market is a bit stronger than the market expected,'' said Robert Sinche, head of global currency strategy at Bank of America Corp. in New York. ``The report may push the market to question that it may be too early to discount a rate cut. The dollar gets some support here.''

The dollar rose 1.1 percent, the most since July 12, to 118.99 yen at 11:09 a.m. in New York from 117.71 yen yesterday. The U.S. currency touched 119.10 yen today, the highest since 119.19 on March 13. It increased to $1.2585 per euro from $1.2694. The U.S. currency broke through the $1.26 level for the first time since July.

Gains against the yen accelerated when the dollar strengthened beyond 118.50 yen, breaking through a 8-year trend line that analysts chart to predict price moves, said Brian Taylor, chief currency trader at Manufacturers & Traders Trust in Buffalo, New York.

Japanese Prime Minister Shinzo Abe told reporters in Tokyo today that Japan has information North Korea may test a nuclear bomb this weekend, prompting investors to seek a haven in the dollar.

The U.S. jobless rate fell to 4.6 percent from 4.7 percent in August, the Labor Department said today in Washington. Economists were looking for it to stay unchanged. The 51,000 gain in employment followed a revised 188,000 rise in August that was almost 50 percent bigger than previously reported.

http://www.bloomberg.com/apps/news?pid=20601083&sid=a2tfiyRjVb9s&refer=currency
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Oct. 16 (Bloomberg) -- The dollar fell the most against the yen in two weeks after Russia's central bank said it was adding the Japanese currency to its foreign-exchange reserves.

Traders sold the U.S. currency after Alexei Ulyukayev, the Russian central bank's first deputy chairman, told Interfax he may boost holdings from almost zero percent. Russia's reserves, the world's third largest, have swelled about 50 percent this year to $267.9 billion as oil prices surged. The U.S. currency rose to the highest against the yen this year on Oct. 13.

``The move could lead toward broader U.S. dollar weakness,'' said Mark Meadows, a strategist at currency-trading company Tempus Consulting in Washington. With the dollar near key trading points of 120 yen and $1.2470 per euro ``it brings up the question of whether the dollar is going to be able to sustain moves past these levels.''

The dollar slid 0.5 percent, the most since an identical decline on Oct. 2, to 119.05 yen at 5 p.m. in New York, from 119.64 on Oct. 13. The U.S. currency touched 119.01, the weakest since 118.90 on Oct. 10.

Japan's currency also advanced to 149.19 per euro from 149.71. The dollar was little changed at $1.2534 versus the euro from $1.2513.

The yen has dropped 1.1 percent versus the dollar this year and reached a record-low of 150.73 against the euro on Aug. 31.
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Nov. 6 (Bloomberg) -- The dollar rose for a fourth straight day against the yen, its longest winning streak in about a month, after Chicago Federal Reserve Bank President Michael Moskow said the central bank may need to raise interest rates to cut inflation.

The dollar was supported by renewed expectations the Fed will hold borrowing costs steady through the first quarter of 2007, after a government report released Nov. 3 showed an unexpected drop in the unemployment rate. That prompted traders to trim bets for a rate cut at the central bank's March 21 meeting. Higher interest rates can boost a currency by attracting investment.

``The Fed is still more worried about the upside inflation risk than the downside risk of slower growth,'' said Alan Ruskin, head of international currency strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut. ``The market's been tending to run ahead of itself on the potential for Fed easing.''

The U.S. currency advanced to 118.29 yen at 2:01 p.m. in New York from 118.01 on Nov. 3, giving the dollar its longest winning streak against the Japanese currency since the period ended Oct. 11.

The dollar touched 118.46 yen, the highest since 118.72 on Oct. 27. The currency traded at $1.2722 per euro from $1.2718.

The unemployment rate decreased to 4.4 percent in October, the Labor Department said Nov. 3. Analysts surveyed by Bloomberg News expected the rate to remain unchanged at 4.6 percent. Workers' average hourly earnings rose 0.4 percent after increasing 0.2 percent the previous month. Economists in a Bloomberg survey expected a 0.3 percent gain.

http://www.bloomberg.com/apps/news?pid=20601080&sid=aO0wTCKdx72U&refer=asia

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Nov. 23 (Bloomberg) -- The dollar traded near a five-month low against the euro on signs economic growth is slowing and inflation pressure is abating.

The U.S. currency also slid to the lowest in almost two months versus the yen as reports yesterday showed a rise in U.S. jobless claims and a drop in consumer confidence. Federal Reserve Bank of St. Louis President William Poole yesterday said economic reports suggest inflation is ``leveling off or declining.'' Yields on U.S. Treasuries held near a seven-month low.

``The trend is for a weaker dollar,'' said Greg Gibbs, a currency strategist at ABN Amro Holding NV in Sydney. ``The recent tide of softer activity and inflation figures are consistent with the argument that we're overdue a more sustained period of U.S. dollar weakness.''

The dollar was at $1.2934 per euro at 10:08 a.m. in Singapore compared with $1.2942 late yesterday in New York, when it reached $1.2957, the weakest since June 5. The U.S. currency was at 116.67 yen from 116.74.

The U.S. currency will decline to $1.30 per euro and 115 yen by year-end, said Gibbs, adding that trading in currencies will be about half of usual today because of public holidays in Japan and the U.S.
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By Michael R. Sesit

Dec. 4 (Bloomberg) -- U.S. investors who are congratulating themselves for putting money into stocks in Europe and Asia may soon find the best times are over.

Two-thirds of the 116 percent return Americans have gotten from the Dow Jones Stoxx 600 Index since January 2002 has come from the decline of the dollar against the euro. The dollar reached a 20-month low last week against the euro and a 14-year low versus the British pound.

Now investors face a potential double whammy. The dollar's weakness may curb exports to the U.S., hurting economies and stocks around the world. And the currency's slide might end, eliminating the added kick for American investors.

``If you are a U.S. investor who invested in Europe, you've had tremendous outperformance since early 2002,'' said Lincoln Anderson, chief investment officer at Boston-based LPL Financial Services, a brokerage with $140 billion in client assets. Such investors should ``begin cutting back on their overseas investments, not piling in.'' Anderson is a former economist for Fidelity Investments, Bear Stearns Cos. and the U.S. Council of Economic Advisers.

The Stoxx 600's 116 percent return in dollars since early 2002 compares with 39 percent in euros. This year, Germany's Dax Index has risen 30 percent in dollars and 15 percent in euros. In Spain, the IBEX 35 Index is up 43 percent in dollars and 27 percent in euros. Similar figures for France's CAC 40 Index are 25 percent and 11 percent.

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Dec. 11 (Bloomberg) -- The dollar may gain on speculation the Federal Reserve will signal, after policy makers meet tomorrow, that interest rates are unlikely to be cut anytime soon.

The dollar had its largest weekly advance in three months last week as a U.S. government report showed a bigger-than- expected gain in jobs, prompting futures traders to pare bets on the Fed cutting interest rates. Several Fed officials, including Chairman Ben S. Bernanke, have stressed in the past month that inflation remains their greatest concern.

``The risk is the U.S. dollar's run has a little further to go,'' said Jonathan Cavenagh, a currency strategist in Sydney at Westpac Banking Corp. ``The market will pay more attention to the Fed after the very strong payrolls. There's an expectation the Fed will still be hawkish in its rhetoric and outlook.''

The dollar was at $1.3188 per euro as of 7:34 a.m. in Tokyo compared with $1.3203 in late New York trading on Dec. 8. The U.S. currency was at 116.32 yen from 116.33. It will rise to $1.3144 per euro and 116.75 yen early this week, Cavenagh said.

The Fed will keep the overnight lending rate between banks at 5.25 percent for a fourth straight meeting, according to the median estimate of economists surveyed by Bloomberg. The bank stopped a two-year run of increases in August.
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Dec. 8 (Bloomberg) -- President George W. Bush's administration is ``very frustrated'' with the pace of China's shift toward a market-based exchange rate, said Allan Hubbard, the White House's chief economic adviser.

Bush's administration is under pressure from U.S. manufacturers and an increasing number of legislators to press China to let its currency appreciate. Treasury Secretary Henry Paulson is leading a Cabinet-level delegation to China next week to help address issues that have caused ``tension'' in relations with China, including the exchange rate.

``We're very frustrated with China and the progress they're making and that's why we're devoting such a huge effort to this,'' Hubbard, director of the White House's National Economic Council, said in an interview in Washington. ``They should be moving more rapidly toward a market-based currency system.''

China pegged the yuan to the dollar until July 2005, when it was revalued and linked instead to a basket of currencies. The yuan has advanced 5.7 percent since China ended the peg, closing at 7.8245 in Shanghai today. The government limits the yuan from rising or falling more than 0.3 percent a day.

``On a short-term basis right now we need more flexibility'' in the yuan, Paulson said in an interview with CNBC in Washington today. ``The rest of the world is not going to tolerate China taking too long.''
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Dec. 15 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke urged China to let its currency gain at a faster pace to end a ``distortion'' that benefits exporters.

Bernanke challenged China's policy makers to give greater primacy to markets, improve health care and education, and grant independence to the People's Bank of China. He warned that the distortions caused by an undervalued renminbi, also known as the yuan, could leave China with wasteful investments and costly financial instability later.

``Further appreciation of the renminbi, combined with a wider trading band and with the ultimate goal of a market- determined exchange rate, would allow an effective and independent monetary policy,'' Bernanke said in remarks in Beijing today. This would ``enhance China's future growth and stability,'' he said.

U.S. policy makers are seeking to persuade China to spur domestic demand and narrow a record trade gap that is fueling demands for protection among some legislators and companies. Bernanke is accompanying Treasury Secretary Henry Paulson and six members of President George W. Bush's cabinet for the first session of new biannual talks to ease trade tensions.

Bernanke, 53, didn't comment on U.S. interest rates or the economy in his speech at the Chinese Academy of Social Sciences in Beijing, part of his first trip to China since becoming Fed chief.

`Distortion'

Bernanke said in his prepared remarks that ``the effective subsidy that an undervalued currency provides for Chinese firms that focus on exporting'' is an ``important distortion'' in China's economy. When he delivered his speech, the Fed chairman changed the word ``subsidy'' to ``distortion.''

``The situation has likely worsened recently'' because the yuan has dropped 10 percent on a trade-weighted basis after inflation in the past five years, Bernanke said.

``Bernanke made a reasonable suggestion for China to make the yuan more flexible, because a more flexible currency can help improve resource allocation,'' said Yu Yongding, the state- run academy's head and an adviser to the central bank's monetary policy committee until September. It ``is necessary to help maintain the independence of the central bank's monetary policy, as the country is also relaxing its capital controls.''

China's government has limited the yuan's gains to 5.7 percent since ending its strict peg to the dollar in July 2005. The currency was at 7.8275 per dollar today. China limits movements to a gain or loss of 0.3 percent a day. The currency had its first weekly decline in a month, falling 0.04 percent.
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Dec. 15 (Bloomberg) -- Gold fell to the lowest in five weeks as a gain in the value of the dollar reduced the appeal of precious metals as alternative investments. Silver tumbled 7 percent, the most in three months.

Gold, sold in dollars, generally moves in the opposite direction of the U.S. currency, which reached a three-week high against the euro. The metal is still up 19 percent this year, while the dollar has fallen 9.4 percent against the euro.

``Gold's got this obsession with the dollar,'' said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. ``The dollar's going to end the week higher. The longs in gold are liquidating.''

Gold futures for February delivery fell $11.80, or 1.9 percent, to $619.10 an ounce on the Comex division of the New York Mercantile Exchange, the lowest since Nov. 8. Prices have dropped 5.2 percent this month.

Silver for March delivery declined 97 cents to $12.98 an ounce, the lowest since Nov. 20. The percentage drop was the most since Sept. 11. Prices have slumped 8 percent this month.

Silver at $13 ``is too expensive,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``The funds sold.''

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

The dollar gained after a report showed international investors boosted holdings of U.S. securities by $82.3 billion in October, after a $70.2 billion jump in September. Official institutions such as central banks added $18.5 billion, the most in almost two years, U.S. Treasury data showed.

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By Matt Benjamin and Julianna Goldman

Dec 20 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson is heading for a confrontation on China with the new Democratic- controlled Congress after his department softened its criticism of the country's currency policy.

Lawmakers condemned the Treasury for failing to label China a currency manipulator in its semi-annual foreign-exchange report yesterday and vowed to call Paulson to Capitol Hill to question him on the decision. Unions and manufacturers also criticized the Treasury report, which conceded China's policy of limiting gains in the yuan is a distortion.

``It's the worst kept secret in the world that they are manipulating,'' said Representative Tim Walz, a Minnesota Democrat and Mandarin speaker. ``A sense of urgency is not there, and it's something we need to move on.''

The chorus of criticism raises the risk that Congress will enact punitive actions designed to pressure China. More than two dozen measures aimed at decreasing the record U.S. trade gap with China were held up by Republican leaders in the past two years.

``They are going to get exactly what they deserve from Congress,'' said Robert Baugh, an executive director of the AFL- CIO in Washington. The nation's largest labor federation contributed $40 million to help Democrats win control of Congress. ``Our argument is that this is an illegal subsidy under U.S. trade law.''

Christopher Dodd of Connecticut, incoming chairman of the Senate Banking Committee, and Richard Shelby, the ranking Republican on the committee, said in a joint statement that they are disappointed with the Treasury report.
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Dec. 23 (Bloomberg) -- The euro gained this week against the dollar and yen as a surge in German business confidence led traders to increase bets the European Central Bank will lift interest rates further.

The 12-nation euro set a record high versus the yen as the German report bolstered speculation the ECB will add to its six rate increases from the past year. The yield premium on U.S. Treasuries over German bunds shrank to the lowest since June 2005.

``The trend is still there toward narrower spreads, which should be good for euro-dollar,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto.

The euro rose 0.4 percent this week to $1.3138. It climbed 1 percent to 156.12 yen, touching a record high of 156.43 yen. The euro has gained 11 percent against the dollar and 12 percent versus the yen this year as investors bet the ECB will boost borrowing costs at a faster pace than the Federal Reserve and Bank of Japan.

ECB President Jean-Claude Trichet said on Dec. 20 that policy makers will do ``whatever is necessary'' to tame inflation. The bank lifted its key rate this month for the sixth time in a year, to 3.5 percent.

The Fed, in contrast, left its benchmark rate unchanged at 5.25 percent for the fourth straight meeting this month and said ``economic growth has slowed.''

U.S. 10-year Treasuries yield about 0.72 percentage point more than German 10-year notes. The difference narrowed to 0.67 point this week, the smallest since June last year.
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Dec. 27 (Bloomberg) -- The dollar dropped the most in a week against the euro as the United Arab Emirates said it will convert some of its reserves of U.S. assets into the European currency.

The dollar also had its biggest decline versus the yen this month before a U.S. report that may show consumer confidence fell for a third straight month, fueling bets the Federal Reserve will lower interest rates next year. The U.S. currency has slipped 9.9 percent versus the euro this year, its first slide since 2004.

``The U.A.E.'s decision to relocate its reserves is part of a theme that means that U.S. dollar holdings in global currency reserves are decreasing,'' said Hans Guenter Redeker, head of currency strategy in London at BNP Paribas SA. ``The dollar is going to lose support as we see Fed rate cuts next year.''

The dollar fell to 118.63 yen at 7:17 a.m. in New York, from 119.15 late yesterday. The currency slid to $1.3158 versus the euro, from $1.3098. The euro traded at 156.09 yen, from 156.04, after touching a record 156.43 on Dec. 21. The dollar has risen 0.8 percent against the Japanese currency this year.

The U.A.E. will switch 8 percent of its reserves from dollars into euros before September, Sultan Bin Nasser al-Suwaidi said in a Dec. 24 interview in Abu Dhabi. The U.A.E. has started ``in a limited way'' to sell its dollar reserves, he said.

The Gulf state is among oil exporters including Iran, Venezuela and Indonesia that are looking to shift their currency reserves into euros or price their oil products in the 12-nation currency.
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Dec. 31 (Bloomberg) -- China's central bank, under pressure from the U.S. and other Group of Seven nations to make the yuan more flexible, will in 2007 pursue a ``stable currency policy'' to promote economic growth.

The People's Bank of China ``will continue to strengthen and adjust financial control mechanisms, execute a stable currency policy, improve foreign exchange management and push for financial reforms and innovation,'' Governor Zhou Xiaochuan said today. ``We want to contribute to ensure stable and accelerated economic development.''

Zhou, who met with U.S. Treasury Secretary Henry Paulson in Beijing this month for the inaugural so-called Strategic Economic Dialogue between China and the U.S., has said he wants to increase the flexibility of the yuan at a ``gradual'' pace. U.S. lawmakers, who claim China unfairly keeps its currency undervalued to stoke exports, are keen for Zhou to move faster.

``The market has expectations for the yuan to appreciate further and the Chinese government is also willing to let the yuan strengthen to ease the problem of the widening trade surplus,'' said Zhao Qingming, a researcher in Beijing at China Construction Bank Corp., the nation's fourth-largest lender. ``Whether the appreciation will narrow the trade gap, I am sceptical about it.''

China's widening trade gap has driven the nation's foreign- exchange reserves to $1 trillion and undermined government efforts to cool the economy.
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Jan. 2 (Bloomberg) -- The dollar declined to its weakest in three weeks against the euro on speculation the Federal Reserve will reduce interest rates this year while European Central Bank policy makers increase their benchmark.

The dollar slid against all 16 of the most actively traded currencies before a report tomorrow that may show manufacturing growth stagnated in the world's largest economy. The Fed has held borrowing costs steady since June after a two-year campaign of raising them. ECB council member Erkki Liikanen suggested in an interview broadcast today that rates will rise in Europe.

``It gives further credence to the idea the we will see further interest rate hikes from the ECB,'' said Matthew Strauss, a currency strategist at RBC Capital Markets in Toronto. ``The momentum we've seen late last year in the euro is starting to carry into 2007.''

The currency fell to $1.3284 versus the euro by 9:11 a.m. in New York, from $1.3201 late yesterday, its biggest daily drop since Dec. 19. It earlier touched $1.3297, the weakest since Dec. 8. The U.S. currency fell to 118.72 yen from 119.05.

The dollar fell 10.2 percent against the euro last year.
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Jan. 17 (Bloomberg) -- The yuan rose to its highest since the end of a dollar link in 2005 on speculation China will permit faster appreciation to narrow its record trade surplus.

The International Monetary Fund yesterday suggested that China should play its part in using currency gains to help balance the world's lopsided trade. The nation's commerce ministry this week said a stronger yuan hasn't hurt exports and that will assist in preventing its trade surplus from growing.

``There's less of a reluctance to let the yuan go stronger,'' said Magnus Prim, a senior foreign-exchange strategist at Skandinaviska Enskilda Banken in Singapore. China has given ``a go-ahead for continued or swifter appreciation. It will serve to boost imports and decrease the increase in the trade surplus.''

The yuan gained 0.21 percent, the biggest daily gain since Aug. 17, to 7.7740 against the dollar as of 5:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System. The currency has risen 6.5 percent since the fixed exchange rate of 8.3 to the dollar was ended in July 2005. It may climb 5 percent this year, Prim said.

Allowing the yuan to rise will make Chinese exports more expensive relative to those of Asian rivals, slowing sales overseas and helping to narrow the trade gap. The surplus, which has driven China's foreign-exchange reserves to more than $1 trillion, will make it more difficult for the government to slow growth that is the quickest among major economies.
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Jan. 23 (Bloomberg) -- China, diversifying its $1.07 trillion in currency reserves, may favor U.S. bonds as they can easily be sold should the central bank need to defend the yuan, a former central bank researcher said.

The People's Bank of China needs to be cautious because much of its reserves were created by ``speculative inflows,'' said Zhao Qingming, an analyst at China Construction Bank Corp., the nation's fourth-biggest lender. Premier Wen Jiabao on Jan. 20 said regulators will consider new ways of using the cash pile.

The dollar slumped 1 percent against the euro in the week ended Nov. 11 after central bank Governor Zhou Xiaochuan said he plans to diversify holdings. China, the second-largest holder of Treasuries, trimmed purchases of the securities by 1.7 percent in the first 10 months of 2006 to $346.5 billion.

``China should be prudent with any plans to invest the reserves'' as actively as countries including Singapore do, Zhao said in an interview in Beijing yesterday. ``Speculative inflows are of a short-term nature. Keeping them in less liquid assets with high returns may not be advisable.''

The government may set up an agency to manage about $200 billion modeled on Singapore's state-owned Temasek Holdings Pte, Standard Chartered Plc economist Stephen Green wrote last week. Temasek, with $84 billion of assets under management as of March 31, has bought assets ranging from Chinese banks to Indian cinemas.

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Jan. 30 (Bloomberg) -- The yen may drop for a fourth day against the dollar after government reports showed Japan's household spending fell for a 12th month in December and the jobless rate rose.

The worse-than-expected data on consumer demand, which accounts for more than half of the economy, followed a report yesterday showing a slump in retail sales that pushed the yen to a four-year low. Waning consumption was cited by BOJ Governor Toshihiko Fukui as a reason for keeping borrowing costs at 0.25 percent this month.

``The jobless and spending data are a bad sign for the economy,'' said Mitsuru Sahara, senior currency sales manager in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's biggest lender by assets. ``This data won't lead the Bank of Japan to raise rates quickly, so the yen will remain weak.''
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Jan. 30 (Bloomberg) -- China's currency may rise another 5.5 percent this year and may fluctuate between 7.81 yuan and 7.35 yuan against the U.S. dollar, China Construction Bank said in a research note published in the China Securities Journal.

The government may allow greater flexibility in the yuan's trading this year to help ease the country's trade imbalance, according to the report by the research department of China's fourth-largest lender. China may raise interest rates and requirements for banks reserves to mop up foreign-exchange inflows, the bank said.

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Feb. 12 (Bloomberg) -- The yen may fall after the Group of Seven industrial nations stopped short of saying that the currency's weakness is a threat to the global economy.

The Japanese currency is trading near a record low against the euro and the weakest in four years versus the dollar as the Bank of Japan holds interest rates at 0.25 percent, the least among major economies. At a meeting in Essen, Germany, G-7 officials sought to reconcile Europeans who want the yen to strengthen with the U.S. and Japan, which say the market should set exchange rates.

``Europe has been vocal in saying yen weakness is a problem,'' said Neil Jones, head of European hedge-fund sales in London for Mizuho Financial Group Inc., Japan's second-biggest lender. ``European ministers have completely backtracked. That's squarely yen negative.''

The yen bought 121.82 per dollar at 7:01 a.m. in Sydney from 121.71 per dollar on Feb. 9 in New York. Japan's currency traded at 158.38 per euro from 158.31. The dollar traded at $1.3001 per euro from $1.3008. The Japanese currency lost 0.5 percent last week against the dollar as the yen declined versus 15 of 16 most- traded currencies tracked by Bloomberg.

Finance ministers and central bankers from the G-7, in a communiqué released at the close of their meeting on Feb. 10, urged investors to recognize that Japan's economic recovery is ``on track.'' The statement didn't refer to weakness in the yen.

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Feb. 16 (Bloomberg) -- The yen headed for the biggest weekly gain against the dollar since May on speculation the fastest economic growth in almost three years will prompt the Bank of Japan to raise interest rates next week.

The central bank will probably increase the key overnight lending rate to 0.5 percent from 0.25 percent, 18 of 37 economists surveyed by Bloomberg News predicted. Japan's yen was the best-performing Asian currency this week after a government report showed the economy grew an annualized 4.8 percent in the fourth quarter, faster than the U.S. and the European region.

``I see the yen strengthening into next week,'' said Tony Morriss, currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. ``The GDP data out of Japan were very significant. That puts the chances of a rate hike much higher.''

The yen traded at 119.38 per dollar at 11:40 a.m. in Tokyo from 119.27 in New York yesterday and 121.71 a week earlier. Against the euro, it was at 156.82 from 156.74 yesterday and 158.31 last week. Japan's currency may rise to 117 per dollar at the end of March, Morriss said.

The BOJ's benchmark rate is the lowest in the industrialized world, pushing the yen to multi-year lows against the British pound and the Australian and New Zealand dollars, as investors borrowed cheaply in Japan to fund purchases of higher-yielding assets, so-called carry trades.

The central bank's nine board members last month voted six- to-three to keep rates on hold, pushing down the yen 1.4 percent. Governor Toshihiko Fukui told reporters after the decision that views differed on the strength of personal consumption.
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Feb. 16 (Bloomberg) -- The dollar posted the biggest weekly decline against the yen since May after reports showed housing starts, producer prices and consumer confidence fell.

The U.S. currency also had the largest weekly drop versus the euro since December as traders stepped up bets the Federal Reserve will cut interest rates. Investors pushed the dollar to a one-month low against the yen after Fed Chairman Ben S. Bernanke said this week inflation is likely to slow.

``It definitely made a week for dollar bears,'' said Michael Woolfolk, senior currency strategist at the Bank of New York in New York. ``We are seeing a stream of atrocious data that may dim the growth outlook in the U.S. This hit the dollar.''

The U.S. currency dropped almost 2 percent this week, the largest since the week ended May 12, to 119.25 yen at 4 p.m. in New York. The dollar also declined 1 percent at $1.3140 per euro from a week earlier.

The euro trimmed its weekly advance against the dollar as the European Commission cut its inflation prediction, while boosting its forecast for economic growth.

The dollar initially dropped to the lowest since Jan. 9 against the yen and approached a one-month low versus the euro following the housing start report. The decline then stalled amid speculation Asian investors were buying dollars, said Matthew Kassel, director of proprietary trading at ING Financial Markets LLC in New York.

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February 15 – Bloomberg (Kevin Carmichael): “The U.S. attracted the least investment in its long-term assets in December in almost five years as foreigners sold stocks and Americans sent a record amount of money abroad. Total purchases of equities, notes and bonds dropped to a net $15.6 billion, from a revised $84.9 billion in November, the Treasury Department said today in Washington. Including short-term securities, such as Treasury bills and so-called non-market transactions such as stock swaps, foreigners sold a net $11 billion.”
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March 1 (Bloomberg) -- The yen rose to an 11-week high against the dollar and gained versus the euro on concern falling stock markets are prompting investors to unwind trades they had financed by borrowing the Japanese currency.

Traders also exited the so-called carry trade as they cut their appetite for riskier assets in emerging markets and moved into U.S. government debt. Investors have taken advantage of the lowest interest rate among major economies in Japan to borrow yen and buy higher-yielding assets elsewhere. The yen gained the most since July 2005 on Feb. 27 amid a global equity decline.

``The market is getting nervous,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``Falling equity shares and the rally in Treasuries put carry trade under pressure. You are going to see yen strength as risk appetite is compressed.''

Japan's currency rose to 117.60 per dollar at 11:04 a.m. in New York from 118.56 yesterday. It reached 116.97, the highest since Dec. 13. The yen advanced to 154.73 per euro from 156.85, and strengthened versus the British pound, the Canadian dollar and currencies in Australia and New Zealand.

The yen gained 1.7 percent against the South African rand, 2.3 percent versus the Turkish lira and 1.8 percent against Iceland's krona as investors shunned emerging-market assets.

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March 6 (Bloomberg) -- The yen may extend its advance versus the dollar and euro as a worldwide stock slump prompts investors to unwind riskier investments funded by borrowing in Japan.

Japan's yen rose yesterday to the highest level in almost three months against the U.S. currency as investors reduced so- called carry trades, in which they borrow cheaply in Japan to buy higher-yielding assets elsewhere. Equity markets in Asia, Europe and the U.S. weakened yesterday, extending a decline that wiped out $1.8 trillion in world market value last week.

``It's a risk-aversion trade,'' said Greg Schwake, head of foreign exchange trading at Fortis Financial Services LLC in New York. ``When people get worried, they sell stocks, they sell the carry trade. It's a very nervous market.''

The Japanese currency traded at 115.56 against the dollar at 7:03 a.m. in Tokyo, from 115.53 yesterday when it touched 115.15, the strongest since Dec. 8. The yen traded at 151.26 per euro, from 151.22, after reaching 150.88 yesterday, the highest since Nov. 24. The yen has rebounded from a record low of 159.65 on Feb. 23.

The yen also climbed 2.3 percent against the British pound, 2.6 percent versus the Australian dollar and 3 percent against New Zealand's currency yesterday. Japan's yen has gained 4.4 percent in the past five trading days versus the U.S. dollar.

Traders who borrowed the currency to finance their investments in foreign corporate bonds and emerging-market assets had to buy back the yen to pay their debt financed in Japan, pushing the unwinding of the carry trade.

The yen yesterday pared some of its gains against the dollar after the U.S. benchmark 10-year government note erased its advance. This helped the U.S. currency cap its decline after a rout in Asian and European equities. The Dow Jones Stoxx 600 Index of European shares lost 1.2 percent to 356.40.

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LONDON, March 8 (Reuters) - The yen fell sharply on Thursday, giving up initial gains against the dollar as investors tentatively took a more benign stance on risk, after over a week of trying to curb exposure to yield-dependent carry trades.

A slightly more stable environment was also seen leaving participants with the freedom to concentrate on rate decisions from the Bank of England at 1200 GMT and the European Central Bank at 1245 GMT.

A near 2 percent climb in the Nikkei stocks average <.N225> and a firm start for European shares were supportive factors in making investors slightly more comfortable with borrowing the low-yielding yen to fund purchases of higher-return assets.

The yen had surged in the past week as doubts about the U.S. economy and a broad equities sell-off triggered heavy unwinding of carry trades in a bid to limit exposure to riskier positions.

"We are back in stable markets and this is giving the high yielders the possibility to find some support again, there is a bit of risk appetite back in the market," said Niels From, currency strategist at Dresdner Kleinwort in Frankfurt.

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March 9 (Bloomberg) -- The yen headed for a weekly loss after Asian stock markets climbed, giving traders the confidence to resume carry trades in which they borrow and sell the currency to buy higher-yielding securities.

Japan's yen declined against 15 of the world's 16 most- actively traded currencies today as Asian equities rebounded from last week's biggest slump in eight months. The yen dropped the most against the New Zealand dollar, where the central bank yesterday raised its benchmark interest rate to 7.50 percent.

Stocks are ``a barometer of risk,'' said Akifumi Uchida, deputy general manager of the marketing unit at Sumitomo Trust & Banking Co. in Tokyo. ``Now that the markets have stabilized over the last few days, investors are returning to carry trades by selling the yen.''

Japan's currency dropped 0.4 percent this week to 117.23 per dollar at 12:24 p.m. in Tokyo from 116.80 in New York on March 2. It gained 3.7 percent the previous week. It also fell to 154.14 per euro from 153.89 this week. The yen may weaken to 117.50 a dollar and 154.50 per euro today, Uchida said.
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LONDON, March 20 (Reuters) - The yen extended losses against other major currencies on Tuesday as resurgent stock markets revived investors' appetite for risk and encouraged them to rebuild carry trades.
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April 5 (Bloomberg) -- The euro reached a two-year high against the dollar and approached a record versus the yen as signs of faster growth in Europe raised speculation the European Central Bank will increase interest rates.

Gains in the euro accelerated after it rose above $1.34, triggering orders to buy back the currency, traders said. ECB officials said this week that higher borrowing costs are needed to contain inflation as reports showed strength in manufacturing. The Bank of England kept rates unchanged today.

``The euro is aggressively bought,'' said Tim O'Sullivan, chief foreign exchange trader at Forex.com, a unit of online currency trading company Gain Capital in Bedminster, New Jersey, which has about $250 million funds under management. ``The ECB has more room to go to hike rates.''

The euro advanced 0.47 percent to $1.3431 at 10:17 a.m. in New York, the highest since March 2005. The European currency also rose 0.34 percent to 158.17 yen, approaching a record high of 159.65 set Feb. 23. The euro also gained 0.69 percent against the pound, rising to 68.11 pence.

German industrial production unexpectedly rose for a fourth straight month in February, adding to evidence Europe's largest economy has overcome a tax increase at the start of the year.

Production increased a seasonally adjusted 0.9 percent from January, when it also rose 0.9 percent, the Economy and Technology Ministry said in Berlin today. Economists expected a 0.5 percent decline, according to the median forecast of 39 economists in a Bloomberg News survey.

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An investment agency that is expected to manage part of China's foreign exchange reserves will probably reduce its holdings of dollar assets only gradually, a government economist said Thursday.
China said last month that it would set up the agency to seek higher returns on part of its US$1.07 trillion (HK$8.3 trillion) in reserves, triggering concerns in global markets that Beijing could sell off dollar assets quickly, weakening the currency.

He Fan, a researcher with the Institute of World Economics and Politics at the Chinese Academy of Social Sciences think-tank, said the new vehicle would reduce its dollar holdings gradually.

"Initially, the portfolio of the foreign reserve agency could include a large proportion of US treasuries ... and any move in reducing the holdings of US treasuries will be gradual and cautious," He said.

The composition of the reserves is a state secret, but bankers assume at least two-thirds are parked in low-risk dollar bonds.

He said that China would have little incentive to sell off its dollars in large amounts because that could create a ripple effect, undercutting the value of its dollar-denominated assets.

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April 13 (Bloomberg) -- The dollar slid to a two-year low versus the euro and fell against the yen on speculation government data will today show a widening U.S. trade deficit.

``The report may spark concern whether the U.S. will be able to attract foreign investment to finance the shortfall,'' said Yuji Saito, a senior currency dealer at Societe Generale SA in Tokyo. ``It's a factor for selling the dollar.''

The New York Board of Trade's Dollar Index, which measures its value against currencies of six trading partners, reached a two-year low after International Monetary Fund Managing Director Rodrigo de Rato yesterday said the currency has room to drop. It fell for a second day against the yen on speculation Group of Seven leaders will discuss the Japanese currency's weakness at a meeting in Washington.

The dollar dropped to $1.3519 per euro at 11:56 a.m. in Tokyo from $1.3482 late yesterday. It fell as low as $1.3524, the weakest since Jan. 3, 2005. Against the yen, it was at 118.80 from 119.16. The U.S. currency may fall to $1.3550 per euro and to 118.50 yen today, Saito said.

The dollar index traded as low as 82.196, the weakest since March 2005, taking losses this year to 1.7 percent.

The trade deficit rose to $60 billion in February from $59.1 billion the previous month, according to a Bloomberg News survey. The Commerce Department releases the report at 8:30 a.m. in Washington. China this week said its trade surplus almost doubled in the first quarter from a year earlier. The dollar has declined 1 percent versus the euro since March 30.
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April 14 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson stepped up his push for rule changes that would allow the International Monetary Fund to monitor and disclose cases of countries that manipulate their currencies, calling for action ``very soon.''

``Reform of the IMF's foreign-exchange surveillance is the linchpin'' of needed changes in the 63-year-old fund, Paulson said today in a statement to the IMF's semiannual gathering in Washington. ``We look forward to action in this important area very soon after these meetings.''

The Bush administration since September 2005 has urged the IMF to leave work such as development lending to others and refocus on ensuring currencies aren't manipulated to fuel exports. Paulson is under pressure from lawmakers to address what many economists say are artificially weak exchange rates in countries including China, after the U.S. trade gap widened to a record last year.

The 185-member fund, under Managing Director Rodrigo de Rato, is studying a rewrite of the exchange-rate framework it laid out in 1977. Paulson said it should focus on ``fundamental exchange-rate misalignment'' and the ``dramatic'' rise in global capital flows.

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April 16 (Bloomberg) -- The euro rose to a record against the yen after the Group of Seven industrial nations refrained from saying Japan's currency is too weak and European officials said exchange rates aren't holding back their economies.

The euro climbed to the highest since January 2005 against the dollar after the G-7 said in its April 14 statement that global trade imbalances are starting to narrow and stopped short of expressing concern on any particular currency.

``The G-7 statement shows that officials approve of the way the currency market has been trading,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. ``They approve of euro strength versus the yen and the dollar. There's only upside for the euro from here.''

The euro advanced to 161.70 yen at 11:34 a.m. in Tokyo from 161.31 in New York on April 13, after reaching 162.43, the strongest since the currency's 1999 debut. It was also at $1.3563 after climbing to $1.3577, the highest since January 2005, from $1.3527. The common European currency may rise to 163 yen and $1.37 this week, said Ishikawa.

The G-7 statement omitted mention of the yen, while saying currencies should reflect economic fundamentals and Japan's recovery should be ``recognized by market participants.'' That policy stance was adopted at the previous meeting in February.

``A strong euro is in the interest of Europe,'' Dutch Central Bank Governor Nout Wellink said in an interview in Washington on April 14. ``Domestic demand in Europe is strong.''

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April 19 (Bloomberg) -- The yen strengthened for a third day against the dollar after a report showed demand for services in Japan unexpectedly rose to a record in February.

Japan's currency climbed as signs of improving consumer demand may spur the central bank to raise its key interest rate from 0.5 percent, the lowest among major economies. It gained the most against the higher-yielding Australia and New Zealand dollars as investors reversed trades funded by borrowing yen.

``The more-than-expected services data prompted yen- buying,'' said Toru Umemoto, chief currency strategist at Barclays Capital in Tokyo. ``Expectations of an earlier rate hike are rising among foreign investors.''

The yen rose to 118.31 at 9:44 a.m. in Tokyo from 118.68 in New York yesterday. It climbed to 161.01 per euro from 161.51 yesterday and a record low of 162.43 on April 16. The yen may rise to 118.20 today, Umemoto said.

Japan's currency this week rebounded from to the weakest since 1990 against the New Zealand dollar and a decade-low versus Australia's currency as the central bank is likely to say in an April 27 report that core consumer prices will rise at a faster pace, Reuters reported yesterday, citing Bank of Japan sources.

The tertiary index, a gauge of money spent on services such as retailing and telecommunications, climbed a seasonally adjusted 1 percent after rising a revised 0.4 percent in January, the trade ministry said today in Tokyo. The median estimate of 36 economists surveyed by Bloomberg News was for a 0.5 percent drop.

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