The U.K. pound fell as London-based Hometrack Ltd. said the average cost of a residential property in England and Wales slipped 7.3 percent from a year earlier
The euro stayed lower against the dollar and the yen after a survey by the Ifo institute showed business confidence in Germany, the largest of the 15 economies that share the currency, declined to the lowest level in more than five years in October.
The yen rose more than 2 percent against the dollar for a second day, trading near a 13-year high, as tumbling stock markets prompted investors to sell higher-yielding assets funded with loans in Japan.
The Japanese currency also strengthened against the Australian and New Zealand dollars, two favorites for the so- called carry trade. The Group of Seven nations said yesterday excessive yen movements may threaten financial stability and Japan's Finance Minister Shoichi Nakagawa said his country is ready to act. The pound slid against the dollar, euro and yen after a report showed U.K. house prices slumped.
``These moves are due to extreme risk aversion, and have further legs,'' said Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi Ltd. ``The credit bubble has truly burst and we're seeing panic selling of risky assets that were bought with yen.''
In the past month, Japan's currency has jumped 15 percent against the U.S. currency, 35 percent versus the euro, 58 percent against the Australian dollar and 46 percent versus the New Zealand dollar as traders slashed carry trades. In such transactions, investors get loans in low interest-rate countries to take advantage of higher returns elsewhere. Japan's benchmark rate of 0.5 percent compares with 6 percent in Australia and 6.5 percent in New Zealand.
``We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability,'' the G-7 said in a statement read by Japan's Nakagawa today. Japan urged the G-7 to issue the statement, he said.
Japan last sold its own currency in March 2004.
Futures traders increased bets that the yen will gain against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show.
The dollar also fell against the yen as traders increased bets the Federal Reserve will lower interest rates this week before data that may show the world's largest economy shrank the most since 2001.
Futures on the Chicago Board of Trade showed a 100 percent chance the Fed will cut its 1.5 percent target rate for overnight lending between banks by at least a quarter-percentage point on Oct. 29. Futures showed no chance of lower rates a month ago.
U.S. gross domestic product contracted at a 0.5 percent annual rate in the three months through September, according to the median estimate before the Commerce Department releases data on Oct. 30.