Yen Strengthens to Highest in Five Weeks as Stocks Decline; Dollar Gains

The yen and dollar rose against most major counterparts as stocks fell and concern that Osama bin Laden’s death will prompt reprisal attacks boosted demand for the relative safety of the Japanese and U.S. currencies.

The yen reached its strongest in more than a month versus the dollar as Asia’s benchmark stock index slid to its biggest loss in three weeks. The Australian and New Zealand dollars fell as lower commodity prices damped demand for the nations’ assets. Canada’s currency strengthened as Prime Minister Stephen Harper won a return to office with a majority government. The pound dropped as an index of U.K. manufacturing growth declined.

“It looks like a broad reduction in risk appetite,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London.

The yen rose 0.8 percent to 119.49 per euro at 8:37 a.m. in New York. The greenback gained 0.2 percent versus the European common currency to $1.4795 per euro. Japan’s currency gained 0.6 percent to 80.77 per dollar after appreciating to 80.71, the strongest since March 23.

Financial markets in Japan are shut today for a holiday.

Japan’s currency advanced as the Stoxx Europe 600 slipped by 0.7 percent and U.S. equity futures declined. The MSCI Asia Pacific Excluding Japan Index of shares dropped 1.4 percent.

The yen typically strengthens in times of political, financial and economic turmoil. Japan’s trade surplus makes the currency attractive because it means the nation doesn’t have to rely on overseas lenders. The dollar benefits as the world’s main reserve currency.