The yen approached a 16-year high versus the dollar as Japan’s nuclear crisis intensified, increasing speculation Japanese companies and investors will repatriate funds to help pay for earthquake and tsunami damages. The yen erased earlier losses after Tokyo Electric Power Co. said a reactor containment vessel may have been breached at the crippled Fukushima Dai-Ichi power plant, deepening Japan’s nuclear crisis and increasing the risk of radioactive leaks. The dollar dropped after reports showed U.S. housing starts declined more than forecast and producer prices rose more than expected. “The focus is still very much on Japan and the Middle East,” said Camilla Sutton, a Bank of Nova Scotia currency strategist in Toronto. “There is the expectation of mass repatriation flows coming from both the insurance companies and from corporations.” The yen appreciated 0.1 percent to 80.63 per dollar at 9:04 a.m. in New York, from 80.72 yesterday. The currency reached 80.22 yen on Nov. 1, the strongest since April 1995, when it touched a post-World War II high of 79.75. The dollar rose to $1.3967 against the euro, from $1.3998 yesteday. The Bank of Japan added 5 trillion yen ($62 billion) in one-day operations today. The BOJ has added 28 trillion yen to the financial system since March 14 after Governor Masaaki Shirakawa pledged to keep pumping cash into the economy to stabilize markets. “Why it hasn’t gone any further is the expectation that one of the few things the BOJ can do here besides add tremendous amounts of liquidity is to intervene, and so I think the market believes that they’ll be very active at 80, and just doesn’t want to test that,” said Robert Sinche, global head of foreign exchange strategy at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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