The yen rose for a second day against the euro on speculation investors will reduce holdings of commodities financed with loans from Japan.
Japan's currency strengthened against the South African rand and the Australian dollar, popular targets for so-called carry trades, after gold plunged the most since 2006 and oil fell more than $4 a barrel. Commodities sank on speculation the Federal Reserve will ease the pace of interest-rate cuts, maintaining the allure of dollar-denominated assets.
Risk aversion has reached a new level with commodities slumping overnight,'' said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp, Australia's fourth- largest lender. ``This will add bearish sentiment toward carry and commodity currencies.''
Japan's currency climbed to 154.28 per euro as of 10:26 a.m. in Tokyo from 154.80 in New York, bringing its gains this year to 5.7 percent. The yen advanced to 98.93 per dollar from 99.03. Currency trading volume in Asia today may be about 50 percent of normal levels because of a public holiday in Japan, said Rennie, who forecast the yen may move between 97 and 102 per dollar for the rest of this month.
