Yen Falls as Stock Gains Encourage Purchases of High-Yielders

By Stanley White

Dec. 8 (Bloomberg) -- The yen declined against the Australian and New Zealand dollars as Asian stocks rallied, giving investors confidence to boost holdings of higher-yielding assets funded in the Japanese currency.

The yen weakened against the currencies, favorites of so- called carry trades, after Asian stocks rose for a second day as U.S. lawmakers neared agreement on bridge loans for General Motors Corp. and Chrysler LLC to help the automakers survive this month. The dollar declined against the euro as the possibility of a bailout reduced pressure on finance companies to hoard the U.S. currency during the credit crisis.

“The stock market is pulling the yen lower,” said Tokichi Ito, deputy general manager of foreign exchange in Tokyo at Trust & Custody Services Bank Ltd., a unit of Japan’s second- largest publicly traded lender. “Short-term loans to U.S. carmakers may provide a temporary solution to their woes.”

The yen fell to 60.25 per Australian dollar as of 9:52 a.m. in Tokyo from 60.02 on Dec. 5. Against the New Zealand dollar, the yen was quoted at 49.79 per dollar from 49.50 at the end of last week. The euro rose to $1.2762 from $1.2718. The yen was little changed at 92.68 per dollar and 118.38 per euro.

The yen may decline to 93.50 per dollar today, Ito said.

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net