June 24, 2007	Sunday	Jamadi-us-Sani 08, 1428

NEW YORK, June 23: The dollar was roiled on Friday by turbulence affecting the stock and bond markets while the euro set another all-time high against the yen, which felt more pressure from the so-called carry trade.

Europe's single currency hit a record 166.83 yen compared with 165.61 yen in New York late on Thursday.

Meanwhile, the dollar shot past 124 yen for the first time since December 2002, stretching as high as 124.03 yen. The greenback then eased back to 123.87 yen compared with 123.70 yen on Thursday.

The euro climbed to 1.3467 dollars from 1.3387 a day earlier.

Diminishing expectations for a rate hike in Japan pushed the yen lower against other major currencies, traders said.

The prospects for an extension of the ultra-low interest rates in Japan ignited more carry trades, in which traders borrow yen to invest in higher-yielding assets elsewhere.

No matter which way you slice it, carry trades refuse to die, said Kathy Lien at Forex Capital Markets.

“The voracious appetite for these high yielding currencies confirms that the market is not worried that a big disaster will fall upon the financial markets,” she added.

It has become glaringly apparent that regardless what warnings finance officials spew, the selling of yen against all major currencies remains unabated, added Andrew Busch at BMO Capital Markets.

I suspect that retail Japanese investors are the key culprits. They are naturally long the yen and don't have to borrow it to sell it. They just want the better returns that exist outside their country. As the former head of the Ministry of Finance said yesterday, the only way to reduce the bubble is for the Bank of Japan to raise interest rates.The dollar was dented by the rocky road for the US stock market.

The Dow, bond yields and the US dollar went from being up strongly yesterday to being down strongly today, Lien said.—AFP