Yen Rises as Stock Drop Cuts Demand for Higher-Yielding Assets

April 9 (Bloomberg) -- The yen rose against the dollar and euro as a decline in Asian stocks prompted investors to pare holdings of higher-yielding assets funded with loans in Japan.

The currency gained the most against the Australian and New Zealand dollars, two favorites for so-called carry trades, after Standard & Poor's downgraded the three largest U.S. mortgage insurers and UBS AG said Australian banks may increase provisions for bad debt. The British pound slid to a record against the euro after an industry report showed U.K. consumer confidence was the worst in almost four years.

``Falling stock prices are harming investors' risk tolerance,'' said Satoshi Okagawa, head of the foreign-exchange forward trading group at Sumitomo Mitsui Banking Corp. in Tokyo, a unit of Japan's fourth-largest publicly traded lender by assets. ``Downgrades on the largest U.S. mortgage insurers are bad for market sentiment. The yen is being buoyed by this.''

Source: Bloomberg


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