Yen climbs to 6-wk high as stocks fall on recession concern

The yen rose to a six-week high against the euro and the dollar as stocks fell and Japanese machinery orders unexpectedly declined, stoking demand for the currency as a refuge from the economic turmoil.

The yen climbed against all 16 of the most-traded currencies for a second day on speculation the worldwide slump will sap corporate profit as earnings season gets under way.

The dollar fell for a third day against the Japanese currency on concern the greenback’s role as the world’s reserve currency will be questioned at a Group of Eight meeting starting today.

“Money is gradually being pulled out of risk assets and that benefits the yen,” said Geoffrey Yu, a currency strategist in London at UBS AG, the world’s second-largest foreign-exchange trader.

 

“People have been hoping that the world will become a better place after the crisis, and now reality is catching up.” The yen strengthened to 131.40 a euro as of 7 am in London, from 132.13 on Tuesday in New York. It earlier climbed to 130.42, the strongest since May 21.

Japan’s currency advanced to 94.39 a dollar, after reaching 94.08, the highest since May 22. The euro was little changed against the dollar at $1.3925.

The MSCI World Index of stocks slid 0.5 per cent and Europe’s Dow Jones Stoxx 600 Index declined 0.3 per cent.