Yen Rises Amid Concern Banking Crisis to Delay Global Recovery

Aug. 26 (Bloomberg) -- The yen rose for a second day against the euro amid concern financial losses will delay a recovery in the global economy, boosting demand for Japan’s currency as a refuge.

The yen advanced against all 16-major currencies after White House budget chief Peter Orszag said U.S. unemployment will surge to 10 percent this year. Reuters reported today that Colonial BancGroup Inc., the parent of the Alabama lender taken over by BB&T Corp., filed for Chapter 11 bankruptcy.

“The outlook for economies around the world is still doubtful,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank. “Sentiment is tilting toward risk aversion, with the yen and the dollar being bought.”

The yen rallied to 134.41 per euro as of 9:16 a.m. in Tokyo from 134.65 yesterday in New York. The Japanese currency traded at 94.08 per dollar from 94.18 yesterday. The dollar was at $1.4289 per euro from $1.4296 yesterday.

Japan’s export slump deepened in July, indicating the boost in demand that helped pull the country out of its recession last quarter may be short-lived. Shipments abroad fell 36.5 percent from a year earlier, steeper than June’s 35.7 percent drop, the Finance Ministry said today in Tokyo.