Yen Falls again

The yen fell to near a record low against the euro and declined versus the dollar after minutes from the Bank of Japan's meeting in May said central bankers stuck to a policy of raising interest rates ``gradually.''

Japan's currency also dropped to the weakest since September 1992 against the British pound and a two-decade low versus New Zealand's dollar as fund managers increased investments using borrowed yen in the so-called carry trade. Minutes from the Bank of England added to speculation of an interest-rate increase as soon as July, lifting the pound and adding to yen selling.

``The continued outlook in Japan is to normalize monetary policy at a very gradual pace, which keeps pressure on the yen,'' said Carl Forcheski, vice president on the corporate currency sales desk at Societe Generale SA in New York. ``Japanese investors are likely to continue to move money abroad to seek higher yields.''

The Japanese currency fell 0.1 percent to 165.86 per euro, approaching a record low of 166.12 set yesterday. The yen also declined 0.1 percent to 123.51 per dollar, close to a 4 1/2-year low of 123.75 on June 18. The dollar traded little changed at $1.3427 per euro.

The yen also dropped 0.4 percent against the British pound to 246.21 yen and earlier touched 246.38. The Japanese currency also lost 0.6 percent to 94.14 per New Zealand dollar, trading above 94 for the first time since October 1987. The yen has dropped against all 16 major currencies tracked by Bloomberg this year.

No `Predetermined Schedule'

Deputy BOJ Governor Toshiro Muto today said policy makers don't have ``any predetermined schedule'' for increasing their benchmark interest rate from 0.5 percent, the lowest among major economies. It compares with 5.25 percent in the U.S., 4 percent in Europe, 5.5 percent in the U.K. and 8 percent in New Zealand.

The Swedish krona was the top performer among currencies tracked by Bloomberg after the country's central bank raised interest rates and predicted two more increases. The currency gained the most in almost five years against the euro, jumping 1.7 percent to 9.2641, from 9.4155 yesterday.

The pound gained against the dollar and euro after minutes of the Bank of England's last policy meeting showed Governor Mervyn King and three other policy committee members voted for higher interest rates.

The pound rose 0.2 percent to $1.9933 and increased 0.2 percent to 67.37 pence per euro.

source:www.bloomberg.com