The dollar plunged to a 13-year low versus Japan's yen Thursday, falling below 100 yen to 99.77 yen before recovering somewhat, after the markets received work that the a Carlyle Group fund had moved closer to collapse, Bloomberg News reported Thursday. The dollar also fell against the world's other, major currencies. The dollar fell about one-half cent to $1.5587 versus the euro, about 1 cent to $2.0350 versus the British pound, and about one-half cent to $1.0088 versus the Swiss franc.
The dollar did recover slightly against the yen to 100.12 yen later in the Asia session, but the plunge to 99.77 represented the dollar's lowest level against the yen since October 1995. During that period of dollar depreciation, the Bank of Japan, Japan's central bank, intervened to support the dollar. Thus far, there's little indication the central bank will do the same today, independent currency trader Andrew Resnick told BloggingStocks Thursday.
Japan: in defensive mode
Resnick said Japan "appears to be in defensive mode." He said Japan institutions and companies are concerned that rising oil prices will slow consumer spending, increase business costs and erode purchasing power. Because oil is priced in dollars, Japan wants to retain as much purchasing power regarding oil as possible by letting the yen rise. Historically, the BOJ would intervene to support the dollar to prevent prices of Japan's exports from rising.
Thursday's dollar selling followed an announcement by Carlyle Capital Corp.,co-founder David Rubenstein, who said in a statement it defaulted on about $16.6 billion of debt as of Wednesday, Bloomberg News reported. Lenders will ``promptly'' take over all of its remaining assets and any remaining debt is expected to go into default "soon."
Resnick said he expects the dollar to fall to 95 yen by the end of 2008. He also expects the dollar to fall to $1.65 versus the euro and $2.05 versus the British pound by the end of 2008. Resnick added that he has dollar short adding positions in the euro-dollar, British pound-dollar, and yen-dollar currency parings.
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