Yen weakens as Japanese exports take a tumble

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(Agencies)
Updated: 2008-12-23 07:52

The yen weakened against the euro and the dollar as Japanese exports tumbled and US government aid to General Motors Corp and Chrysler LLC reduced demand for the currency as a haven.

The yen dropped to the lowest level versus the dollar in almost a week after Bank of Japan Governor Masaaki Shirakawa said the nation's exports may decline further because of the yen's strength and the global slowdown. Exports plunged by a record in November. The dollar weakened against the euro before data this week that may show US consumer spending, home sales and durable goods orders declined.

"People have been encouraged to put in a bit more of the risk trades and that's taking the top off some of the yen gains," said Jeremy Stretch, senior market strategist in London at Rabobank International, the third-biggest Dutch lender. "They are also assessing the state of the economy and asking if the big moves we've seen in the yen are justified."

The yen dropped to 125.85 per euro at 11:04 am in London from 124.22 on Dec 19, paring its gain this year to 29 percent. It declined to 89.95 against the dollar from 89.31 late last week. It reached 90.23, the lowest level since Dec 16.

The dollar weakened 1.1 percent to $1.4067 per euro from $1.3912 on Dec 19. It slid to $1.4719 on Dec 18, the weakest level since Sept 25. The US currency was little changed at $1.4913 versus the British pound from $1.4920.

Against the yen, Singapore's dollar climbed 0.9 percent to 61.87 and New Zealand's dollar advanced by the same amount to 51.85.

The yen appreciated 25 percent against the dollar this year, headed for its biggest annual gain since at least 1972, as more than $1 trillion of credit-market losses sparked a seizure in money markets and threw the world's largest economy into a recession.

The dollar snapped two days of gains against the euro before US reports that economists estimate will show the world's largest economy is slipping further into recession.

Consumer spending fell 0.7 percent in November and orders for durable goods may show a second straight decline, according to Bloomberg News surveys of economists.