Yen Rises a 4th Day on Concern U.S. Economy Will Keep Shrinking

April 27 (Bloomberg) -- The yen rose for a fourth day against the dollar after Lawrence Summers said the U.S. economy will keep shrinking, boosting demand for the Japanese currency as a refugee from a recession.

The dollar also declined as the number of cases of swine flu in the U.S. and Mexico increased, leading to selling of the greenback. “The economy will continue to decline,” with “sharp declines in employment for quite some time this year,” Summers, director of the White House National Economic Council, said yesterday on “Fox News Sunday.”

“The market is returning to pessimism-driven trading,” said Daisuke Uno, chief strategist in Tokyo at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest bank. “This means that the yen may be bought.”

The yen rose to 96.75 yen against the dollar as of 8:43 a.m. in Tokyo from 97.17 in New York on April 24. The Japanese currency advanced to 127.90 per euro from 128.66. The dollar traded at $1.3222 from $1.3242 last week.

The yen may strengthen to 90 per dollar by the middle of next month, Uno said.

“The outbreak of swine flu may have a psychological but negative impact on the dollar given the geographical proximity of the U.S. and Mexico,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second-largest lender.