* Yen hits another 14-year high on dollar, yen crosses fall
* Pro-risk trades unwound on concerns about Dubai debt
* Japan finmin raises prospect of G7 joint statement on FX
By Kaori Kaneko
TOKYO, Nov 27 (Reuters) - The yen hit its highest level in 14
years on the dollar on Friday and jumped against higher-yielding
currencies as investors cut risk trades on concerns about debt
problems in Dubai, while Japan signalled growing discomfort with
the surge.
After plummeting on Thursday, the dollar plunged to a new
14-year trough below 85 yen as investors unwound yen-funded carry
trades in the likes of the Australian and New Zealand dollars.
In a market made thinner by a U.S. holiday on Thursday,
Japanese exporters fuelled the drop by buying yen ahead of the
month-end, while traders also dumped dollars due to option
triggers at 85.00 yen, and sell orders kicked in below that
level.
Japan's finance minister raised the prospect of a Group of
Seven joint statement on currencies to cool the yen's rally, but
some traders and analysts were sceptical the move was disorderly
enough to draw a response from the U.S. or Europe just yet.
[]
The comments gave a bit of a lift to the dollar and the other
currencies against the yen, but traders said investors who had
gone short were already buying back the currencies after some
fell 2 and 3 percent, and the impact of the comments was limited.
"It is all about unwinding of carry trades with the euro
falling and the Aussie being the most vulnerable," said Hideaki
Inoue, deputy general manager of foreign exchange trading at
Mitsubishi UFJ Trust Bank.
"The yen is drawing funds because of its relative safety
appeal in comparison to the euro and the dollar after the Dubai
debt scare raised caution over potential loan problems among
European banks and a credit crunch in emerging markets."
Dubai struggled to ease fears of debt default on Thursday
after its move to delay repayments at two flagship firms shook
confidence in the Middle East as a centre for investment and a
source of capital. []
European share markets fell on Thursday and shares in Asia
also dropped, adding to the nervous climate. []
The dollar fell as far as 84.82 yen <JPY=>, its weakest since
1995 and ever closer to its record low of 79.75, before pulling
back up to 86.05 yen, still down 0.6 percent on the day.
Stop-loss selling in the dollar by Japanese margin traders
likely gained steam after the greenback's drop below 86.00 yen,
according to major margin broker GAITAME.com.
The broker also said initial signs suggested that there was a
surge in loss-cut selling by margin traders earlier on Friday.
"The market was driven by stop losses in yen crosses in thin
trade," said Kazuyuki Kato, treasury department manager at Mizuho
Trust & Banking.
"The market bias is for risk-avoiding trade," he said.
The euro dropped 1.3 percent to 128.36 yen <EURJPY=R> after
falling as far as 126.95 yen, its lowest since late April. The
Australian dollar shed 1.6 percent to 77.88 yen <AUDJPY=R>, after
tumbling below 76.60 yen.
The euro was down 0.7 percent at $1.4922 <EUR=> and the
dollar index <.DXY> was up 0.5 percent at 75.199.
JAPAN OFFICIALS ALERT OVER DOLLAR FALL
Finance Minister Hirohisa Fujii raised the prospect of a
Group of Seven joint statement on currencies and said a
government response to extreme moves was possible. []
While some analysts said the G7, or the bigger G20, could
issue a statement to prevent the dollar from weakening further,
or Japan could step in alone, others doubted the chance of joint
intervention above 80 yen.
"The rhetoric that we've heard seems to be trying to quell
speculation that Japan won't ever intervene but it seems to
indicate that they'd prefer not to do so," said Naomi Fink, Japan
strategist at Bank of Tokyo-Mitsubishi UFJ.
"The dollar is weakening because the main imbalance in the
U.S. economy is driven by the (Chinese) renminbi peg to the
greenback. So joint intervention is not going to do a whole lot
on that."
Earlier on Friday in Tokyo, Japan's government and the Bank
of Japan were checking dollar/yen rates with commercial banks,
market sources said, prompting some traders to cover yen long
positions. []
Investors will be watching U.S. financial markets when they
reopen on Friday after the Thanksgiving holiday on Thursday.
"The market focus will be moves in the U.S. stocks, commodity
markets, as well as other asset markets, not only today but in
the days ahead," said Jun Kato, senior chief analyst at Shinkin
Central Bank Research Institute.
"If those markets start falling, unwinding of the yen and
dollar carry trades is expected to accelerate, meaning dollar/yen
is then likely stay in a narrow range," he said.
(Additional reporting by Satomi Noguchi, Charlotte Cooper;
Editing by Joseph Radford)
((kaori.kaneko@thomsonreuters.com; Reuters Messaging:
kaori.kaneko.reuters.com@reuters.net; +81-3-6441-1983))
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