Yen Approaches 13-Year High Versus Dollar on Auto Bailout Doubt

Dec. 15 (Bloomberg) -- The yen rose, approaching a 13-year high against the dollar, due to uncertainty over whether U.S. President George W. Bush will use funds set aside for banks to bail out the country’s automakers.

The yen also advanced against the Australian and New Zealand currencies after the U.S. Senate last week rejected legislation to provide General Motors Corp. and Chrysler LLC with $14 billion, deterring investors from buying higher- yielding assets. The yen remained higher after the Bank of Japan’s Tankan index of business sentiment plunged the most in 34 years.

“There’s no meaningful obstacle to further yen appreciation,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co. Ltd., a unit of Japan’s largest brokerage. “Uncertainty about how the U.S. will rescue its automakers supports the yen.”

The yen rose to 90.78 per dollar as of 8:53 a.m. in Tokyo from 91.21 late in New York on Dec. 12, when it advanced to 88.53, the strongest level since August 1995. It was little changed at 121.97 versus the euro from 121.83 last week. The dollar declined to $1.3436 per euro from $1.3369 on Dec. 12, after touching an eight-week low of $1.3454. The yen may rise to 90 per dollar today, Amikura said.

The Bush administration said on Dec. 12 it will consider using money from its $700 billion bank-bailout fund to prevent GM and Chrysler from “collapsing.” A bankruptcy filing by either company would worsen the longest recession since the early 1980s.

The Tankan index that measures confidence among large makers of cars and electronics slid to minus 24 from minus 3, the BOJ said today in Tokyo. A negative number means pessimists outnumber optimists. Economists expected the index to decline to minus 23, according to a Bloomberg News survey.