Yen slide to 5 months Low

The Japanese yen declined to a five- month low against the dollar and the euro as Asian stocks extended a worldwide equity rally on speculation the worst of the global financial crisis may be ending.

The yen fell against all of the 16 most-actively traded currencies, sliding against New Zealand’s dollar to the lowest since November, on expectations Federal Reserve Governor Kevin Warsh will signal today credit markets are thawing, damping demand for Japan’s currency as a refuge. The euro rose to a one- week high against the dollar on optimism a European Central Bank official may indicate a slower pace for rate cuts.

There’s a sense the global turmoil is easing, which is improving risk-taking appetite. This means the yen will likely weaken and currencies such as the euro and the pound will probably strengthen in coming days.

The yen traded at 136.76 per euro. Japan’s currency reached 100.93 against the U.S. dollar, the weakest since Oct. 21. The euro advanced for a third day against the dollar, climbing to $1.3567 from $1.3486.

New Zealand’s dollar rose as high as 60.35 yen, the strongest since Nov. 5. South Korea’s won rose 1.5 percent to 1,320.9 per dollar, extending four weeks of gains, as a demand increased for emerging-market assets following the Group of 20’s decision last week to strengthen the International Monetary Fund.

Demand for the euro increased on speculation European Central Bank Executive Board Member Lorenzo Bini Smaghi may signal in a speech today that the bank will slow the pace of rate cuts after lowering them last week.

The euro may strengthen to $1.3600 and 136.80 yen today. Benchmark rates are 0.1 percent in Japan, 0.5 percent in the U.K. and between zero and 0.25 percent in the U.S.

ECB President Jean-Claude Trichet said on April 3 that the central bank’s target lending rate could in a very measured way go down from the 1.25 percent level.

Analis predict that The Bank of Japan will keep interest rates near zero percent at the end of its policy meeting tomorrow.