Yen Falls as BOJ's Fukui Says No Preset Time for Rate Increase

Nov. 13 (Bloomberg) -- The yen fell against all 16 of the most-active currencies as Bank of Japan Governor Toshihiko Fukui said there was no set time for raising interest rates.

The currency dropped the most in eight weeks versus the euro after the BOJ kept its overnight lending rate at 0.5 percent and Japanese Prime Minister Yasuo Fukuda said the currency's extreme volatility is not desirable. The dollar extended losses after a United Arab Emirates central bank official said the country's dollar peg was at a ``crossroads.''

``This has just been seen as a selling opportunity,'' said Neil Mellor, a currency strategist at Bank of New York Mellon Corp. in London. ``By no means does the move signal that concerns about growth and inflation have dissipated.''

The yen fell to 109.90 per dollar as of 10:04 a.m. in London, from 109.41 in New York yesterday, when it rose to 109.13, the highest since May 17, 2006. The yen slid 1.3 percent to 160.29 per euro, from 158.99.

The dollar reversed gains against the euro on speculation economic data this week will show weakness in U.S. housing and consumer spending, pressuring the central bank to ease monetary policy a third time this year. It dropped to $1.4584 against the euro, from $1.4531 late yesterday in New York.

United Arab Emirates

It also extended losses after comments from United Arab Emirates central bank Governor Sultan Bin Nasser al-Suwaidi fueled speculation the country may end its fixed-exchange rate against the U.S. currency.

``We have reached a crossroads now with a further deterioration in the U.S. dollar and expected further weakening of the U.S. economy,'' Reuters cited him as saying in Tokyo today.

The U.A.E. has no plans to drop the peg alone and any decision will be made by the Gulf Cooperation Council ``at the right time,'' he said, according to the report.

The dollar has declined 2.3 percent against the euro this quarter, falling to $1.4752 on Nov. 9, an all-time low against the synthetic euro, a theoretical value that estimates where the currency would have traded before its inception. The prior record was $1.4557 set in 1992.

The euro's gains have helped weaken investor confidence in Germany, pushing it to its lowest in more than 14 years, a survey of economists shows.

Source: Bloomberg