Yen Falls as Rising Stocks Spur Demand for High-Yield Assets

By Ron Harui and Theresa Barraclough

April 2 (Bloomberg) -- The yen fell against the euro on speculation that gains in Asian stocks will prompt investors to increase purchases of higher-yielding assets.

The euro rose versus the dollar on optimism that European Central Bank President Jean-Claude Trichet will signal the bank will refrain from cutting interest rates further after lowering them later today. New Zealand’s dollar may decline against the greenback after Finance Minister Bill English said a stronger currency would make it difficult for the nation to snap out of its worst recession in more than three decades.

“Asian and Japanese stocks are rising, reflecting an improvement in risk appetite,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co., a unit of Japan’s largest brokerage. “This is leading to selling of the yen.”

The yen dropped to 131.08 per euro as of 10:43 a.m. in Tokyo, from 130.52 in New York yesterday. Japan’s currency also declined to 98.76 against the dollar from 98.53.

New Zealand’s dollar traded at 56.74 U.S. cents, from 56.78 cents yesterday. The currency earlier slipped as much as 0.7 percent following the finance minister’s comments.

The Nikkei 225 Stock Average rose 2.8 percent and the MSCI Asia-Pacific Index of regional shares advanced 2.7 percent. The Standard & Poor’s 500 Index climbed 1.7 percent yesterday.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net