The yen extended its losses against the euro and the dollar in Asia Friday as investors sold the Japanese unit amid growing speculation of interest rate hikes in the euro zone and the United States, according to AP. The dollar traded at 106.07 yen Friday afternoon, up from 105.64 in New York late Thursday. The euro gained to 165.53 yen from 165.16 yen. Against the dollar, the euro was little changed at US$1.5603. Tokyo dealers say the yen could fall further in the days ahead due to a resurgence of yen-carry trades, an investment strategy through which players borrow funds in yen to purchase higher-yielding assets, such as stocks, denominated in other currencies. «The only certainty at this point is that the yen is weak,» said Masanobu Ishikawa, manager of FX at Tokyo Forex and Ueda Harlow. He added that Japan has yet to face strong inflationary pressure, and so most players don't expect the country's interest rates to rise anytime soon. «Central banks (around the world) are on guard against inflation and interest-rate differentials between Japan and other countries could widen further, which is spurring yen sales by short-term investors,» said JPMorgan Chase Bank strategist Junya Tanase. Overnight, European Central Bank Governor Jean-Claude Trichet didn't rule out the possibility of a rate hike in July, while U.S. Federal Reserve Chairman Ben Bernanke recently said the Fed should grapple with inflation. In contrast, the Bank of Japan is expected to stand pat for a while as the country's consumer prices, excluding food and energy, remain close to zero. The dollar was mixed against other Asian currencies. It rose to 44.130 Philippine peso, while falling slightly to 30.351 Taiwain dollar.
