Yen Advances as Drop in Japan Stocks Boosts Demand for Refuge

Nov. 5 (Bloomberg) -- The yen rose against the euro and dollar as Japan’s stocks declined amid concerns the global economic recovery will be slow, boosting demand for the Japanese currency as a refuge.

The yen advanced against all 16 major counterparts before a report tomorrow forecast to show the U.S. jobless rate climbed last month. The New Zealand dollar dropped after Reserve Bank Governor Alan Bollard said the nation’s recovery from the global recession will be slower than Australia’s and the statistics bureau reported that the jobless rate climbed to the highest level in more than nine years.

“Falling stocks are boosting demand for the yen,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. “The yen continues to be bought when risk aversion hits the market.”

The yen rose to 134.52 per euro at 9:54 a.m. in Tokyo from 134.85 in New York yesterday. It climbed to 90.59 per dollar from 90.72. The dollar traded at $1.4852 per euro from $1.4861.

The Nikkei 225 Stock Average fell 0.6 percent.

The dollar traded near the lowest level in a week against the euro after the Federal Reserve reiterated a pledge to keep borrowing costs near zero, helping its $1 trillion injection into the economy to revive growth.

“Until the Fed starts signaling interest rate hikes, positive economic data will keep encouraging investors to sell the dollar and buy higher-yielding assets,” said Masahide Tanaka, senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest lender. “Improving non-farm payrolls data will boost risk appetite, weighing on the dollar.”

Fed Keeping Rates Low

The Fed yesterday reiterated its intention to keep interest rates “exceptionally low” for “an extended period” as long as inflation expectations are stable and unemployment fails to decline. Policy makers held the target rate for overnight lending between banks at zero to 0.25 percent.

U.S. employers eliminated 175,000 jobs in October after a reduction of 263,000 in September, according to the median forecast of 84 economists in a Bloomberg survey. The Labor Department report is due tomorrow. Another government report tomorrow is forecast to show the unemployment rate in the U.S. probably rose to 9.9 percent last month from 9.8 percent in September.