Dollar at 3-year low against the yen

The dollar declined to a three-year low against the yen on speculation banks will report more losses from the collapse of the US subprime-mortgage market.

The currency fell to less than 103 yen for the first time since January 2005 and was within 1 cent of its weakest ever against the euro as stocks dropped and the cost of protecting corporate debt from default rose to record highs. The dollar slipped before an industry report forecast to show manufacturing in the US dropped to the lowest level since April 2004.

"Dollar risks are here to stay," Benedikt Germanier, a Stamford, Connecticut-based currency strategist at UBS AG, the second-biggest currency trader, wrote in a note to clients. Investors "are reducing dollar exposure with US downside growth risks".

The dollar weakened to 102.62 yen, the lowest since Jan 28, 2005, before trading at 102.91 at 11:09 am in London, from 103.74 in New York on Feb 29. It traded little changed at $1.5180 per euro at the end of last week, when it reached $1.5239, the lowest since the European currency's debut in January 1999.

The yen gained the most versus the South African rand as credit-market losses prompted investors to reduce holdings of higher-yielding assets financed with loans from Japan. The yen advanced 1.5 percent to 13.0519 per rand.

The New Zealand and Canadian dollars also rose versus the US currency as the price of gold climbed to a record and crude oil traded to near $102 a barrel.

"The dollar is in a clear free-fall, down versus every major and emerging-market currency," Jan Loeys, head of global-market strategy at JPMorgan Chase & Co in London, wrote in a note to clients.

Agencies

(China Daily 03/04/2008 page17)