MW: Japan's yen on track for week of historic gains
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) -- The yen continued its advance against the currencies of Japan's major trading partners Friday, gaining beyond the 100-level against the U.S. dollar, as investors continued to unwind carry trades amid heightened global risk aversion.
The yen was quoted at 98.68 against the dollar, from 99.46 yen late Thursday in New York and 100.32 yen there late Wednesday. The yen was quoted at 133.89 against the euro, compared to 145.11 on Oct 3. Against the Australian dollar the yen was quoted at 65.03, on track for a more than 25% gain this week.
"It's risk aversion," said Haruya Ida, chief economist at Thomson IFR in Tokyo. "The plunge in [Japanese] stocks doesn't seem to be affecting sentiment towards the yen in general simply because with the financial and banking turmoil around the globe, Japan seems to be better suited to ride out the storm."
The advance put the Japanese currency on track for its largest-ever weekly gain against the euro and its biggest weekly gain against the dollar in a decade, according to Bloomberg.
Tokyo's Nikkei 225 Index was down 9.5% at 8,285.62 in late Friday trading.
Japanese exporters were growing increasingly concerned the yen's advance will negatively impact profit outlooks this year. The Bank of Japan's tankan survey released last week found exporters were expecting the yen to trade around the 102-level against the dollar on average in the second half of the year through March 31.
The Nikkei newspaper reported earlier in the week Toyota Motor expects operating profit to decline 160 billion yen ($1.61 billion) from its earlier forecast if the yen averages above 100 to the dollar and 135 against the euro in the second half.
In other currency action Friday, the Singapore dollar fell to S$1.4833 against the dollar, from S$1.4686 in the previous session after Singapore's monetary authority said it was abandoning its strong currency policy as economic growth weakens.
"Emerging market economies have tipped into financial crisis mode," wrote Aaron Smith, senior economist at Moody's Economy.com "As the risk of a global recession builds, financial capital is flowing out of emerging economies."
