Everyone Loves Yen in Subprime World of Slowing U.S.

Jan. 15 (Bloomberg) -- The poorer the prospects for the U.S. economy, the more attractive Japan's yen is to Alan Eisner.

The hedge fund manager at Millennium Global Investments Ltd. in London says slower growth in the U.S., Japan's biggest export market, will cause Japanese investors to pare their overseas purchases. At the same time, the most volatile exchange rates this decade are forcing traders to buy yen to repay loans denominated in the currency.

``Now is a good time to buy,'' said Eisner, a senior managing director at Millennium, which has $13.3 billion in assets. ``When the world is doing well, then Japanese investors are very happy to invest abroad. When the world is not looking so great, the dynamic works the opposite way.''

Investors and traders are buying Japan's currency even as its broadest rally in eight years threatens to derail the nation's economy. The country relies on exports for most of its growth and has a 50 percent chance of recession, according to Goldman Sachs Group Inc. Automakers Mazda Motor Corp. and Nissan Motor Co. have tumbled more than 10 percent this month on concern that the rising currency will erode earnings.

``We're looking to buy yen,'' said Paresh Upadhyaya, a senior vice president at Putnam Investments LLC in Boston who helps manage $29 billion in currencies. ``The pillar of yen weakness, a buoyant global environment coupled with low volatility, has flipped.''

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