Yen Falls as Stock Gains Spur Investors to Seek Higher Yields

The yen fell against all 16 of the most-active currencies as a rally in Asian stocks prompted investors to purchase higher-yielding assets funded in Japan.

The currency dropped the most versus Norway's krone, a favorite for so-called carry trades, before a U.S. government factory orders report that may show business spending is holding up in the world's biggest economy. The euro rose on speculation the European Central Bank will keep interest rates at a six-year high this week.

``The U.S. probably won't fall into a recession, supported by a strong corporate sector,'' said Koji Fukaya, a senior currency strategist at Deutsche Securities, the Tokyo unit of Deutsche Bank AG, the world's largest currency trader. ``There are expectations stocks have already bottomed out. This is leading to yen-selling.''

The yen declined to 158.22 per euro as of 7:52 a.m. in London from 157.67 late in New York on Feb. 1. It was at 106.76 versus the dollar from 106.49. The currency may fall to 110 per dollar by the end of March, Fukaya said.

The yen slumped to a three-week low against the Australian dollar, weakening 0.5 percent to 96.76. It dropped 0.7 percent to 19.7005 versus the Norwegian krone and declined 0.6 percent to 210.47 to the British pound.
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