The yen advanced against the dollar and the euro as traders speculated
a global drop in stocks will prompt investors to sell higher-yielding
assets and pay back low-cost loans in Japan's currency. The Standard
& Poor's 500 Index lost 2.7 percent.
``Everything is correlated to equities,'' said Firas Askari, head
currency trader at BMO Capital Markets in Toronto. ``I don't believe
risk appetite will recover any time soon, so the yen will still
appreciate. The market seems fragile.''
The yen advanced 14 percent versus the dollar, 33 percent against the
euro and 53 percent against the Australian dollar in the past three
months as the global economy headed toward a recession.
Japan's currency reached a 13-year high of 90.93 per dollar last month,
threatening exporters' earnings and reducing the value of Japan's U.S.
government debt holdings.
``I would recommend a continuation pattern of buying the yen,'' said
David Bloom, the London-based global head of currency strategy at HSBC
Plc, Europe's biggest bank by market value. ``Don't throw your coin in
the well and wait around listening for the bottom of the market. This
financial crisis is not over.''