Yen rises as BoJ says growth is picking up, prices may rise

Aug 2 | Updated: Aug 3 2005, 05:30am hrs
The yen rose for a second day against the dollar and gained versus the euro after Bank of Japan Governor Toshihiko Fukui said economic growth is picking up and consumer prices may rise at the end of the year.

The yen advanced against all 16 of the most actively-traded currencies, according to data compiled by Bloomberg, after Mr Fukui told parliament that Japans economy may emerge from seven years of deflation. Reports yesterday showed Japanese wages rose the most in seven months and land prices in Tokyo climbed for the first time in more than a decade.

Growth in Japan is gaining more and more momentum, said Niels Christensen, a currency strategist at Societe Generale SA in Paris. This is providing a positive backdrop for the yen. Against the dollar, the yen rose to 111.40 in London from 112.24 in New York, according to electronic foreign-exchange dealing system EBS. The yen gained to 136.15 per euro from 136.21. The dollar fell to $1.2225 per euro, from $1.2179.

The dollar weakened against the euro on speculation central banks are increasing their holdings of euros, said Takehiko Jimbo, foreign-exchange manager in Tokyo at Mitsubishi Trust & Banking Co.

Russia raised the share of Europes single currency in the currency basket used to value the ruble to 35%.