By Ron Harui and Candice Zachariahs (Corrects spelling of brokerage name in third paragraph) Oct. 28 (Bloomberg) -- The yen fell for the first time in six days against the dollar on speculation Japan's central bank will sell its currency for the first time since March 2004. The currency also declined against the euro as a rebound in Asian stocks bolstered investor confidence, helping damp sales of higher-yielding overseas assets that were bought using funds from Japan. Japanese Finance Minister Shoichi Nakagawa said yesterday the government is ready to act if needed to halt gains in the yen, which earlier traded near a 13-year high against the dollar and its strongest since May 2002 versus the euro. ``Equities are rebounding, giving some assurance to investors,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``There also are fears of possible intervention by Japan. All of this is causing selling of the yen.'' The yen dropped to 93.78 against the dollar at 1:52 p.m. in Tokyo, from 92.78 late yesterday in New York. It reached 90.93 on Oct. 24, the highest since August 1995. The currency slid to 116.45 yen per euro from 115.92 yesterday, when it touched 113.64, the strongest level in more than six years. The euro lost 0.5 percent to trade at $1.2432 after Jean- Claude Trichet said yesterday he may cut borrowing costs next week. It fell as low as $1.2330, the weakest since April 2006. The British pound was at $1.5562 from $1.5552. Possible Intervention Japan's Economic and Fiscal Policy Minister Kaoru Yosano said in Tokyo today that abrupt increases in currency volatility are undesirable. ``There's a little bit of concern over intervention,'' said Sharada Selvanathan, a currency strategist at BNP Paribas SA in Hong Kong. ``The market doesn't want to be too long yen for now because the Japanese have clearly suggested that if the yen strengthens they might consider coming into the market.'' In the past month, Japan's currency has advanced 31 percent versus the euro and 52 percent against the Australian dollar on speculation investors will unwind carry trades, in which they get loans in countries with low borrowing costs and seek higher returns elsewhere. Japan's benchmark interest rate of 0.5 percent compares with 3.75 percent in Europe and 6 percent in Australia. The allure of carry trades dimmed in recent weeks as a global credit crisis led to increased currency volatility and fanned a stocks rout that's erased more than $12 trillion of market value this month alone. Japan's Nikkei 225 Stock Average rebounded from the lowest level in 26 years today and Hong Kong's Hang Seng Index snapped a five-day losing streak that drove the benchmark down 28 percent. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

Source