Japanese currency surges to 13-year high against greenback following U.S.

Dollar falls against yen, euro.Central bank slashing rates...

The U.S. dollar fell to a 13-year low against the yen and weakened against the euro Wednesday, a day after the Federal Reserve cut its key short-term interest rates to historic lows.
The Japanese currency reached a 13-year high against the dollar Wednesday, falling to ¥87.23 from ¥88.95 late Tuesday. The last time the yen was this strong was July 1995. Since mid-September, the yen has gained nearly 15% against the dollar.
The Bank of Japan will make an interest rate announcement on Friday. Many of the bank's watchers expect it to hold the rate firm at 0.3%, according to Steve Malyon, currency strategist at Scotia Capital. Japan has the second-lowest interest rate among the world's major economies.
The euro jumped 3.8 cents against the dollar Wednesday, to $1.4418 from $1.4038 late Tuesday. The last time the euro was this strong against the dollar was in late September. Since then, the dollar has gained 2.57% against the 15-nation currency.
The European Central Bank's next meeting is set for January, and investors are watching to see whether the bank will keep its rate firm after slashing it to 2.5% earlier this month.
The dollar made a slight gain Wednesday against the pound, on news of a high level of U.K. jobless claims and that the Bank of England held back when it lowered interest rates to 1 percentage point at its Dec. 4. meeting, fearing a bolder move could pose a risk to the economy.
The rate holds at 2%, the lowest in the bank's history, and it is expected to be lowered once again when policymakers meet in January, according to a note Malyon wrote to investors.
The pound dropped to $1.5534 from $1.5581 late Tuesday. The dollar has gained 14.3% against sterling since mid-September.
Concerns ahead
On Tuesday, the U.S. central bank cut its federal funds rate from 1% to a range between 0% and 0.25%, the bank's 10th cut since September 2007.
While interest rate cuts are the Federal Reserve's main tool for boosting economic activity, many currency analysts worry about the long-term effects of lower interest rates on the dollar.
Cutting interest rates to such historic lows could drive up inflation and reduce the appeal of many assets that are priced in dollars.
Meanwhile, the dollar's status as the world's reserve currency is being hampered by lower rates and the cost of the government's bailouts, according to Ashraf Laidi, currency strategist at CMC Markets.
In addition to aggressive rate cuts, the government has been forced to essentially print more money to help pay for several new initiatives aimed at aiding the weak economy. Flooding the economy with cash has helped ease the credit crunch, but it has also worked to undermine the dollar's strength, Laidi said.
Having interest rates approaching 0% gives rise to "ominous prospects for the greenback once global economic stability starts to build up," Laidi said.
Economy
Oil sank to a 4 1/2-year low after OPEC reported it will cut production in a bid to prop up prices driven lower by global economic downturn.

Track 17 major currencies
U.S. crude for January delivery sank $3.54 to settle at $40.06 a barrel on the New York Mercantile Exchange, the lowest settlement price since July 13, 2004, when oil settled at $39.44.
Kiss the dollar rally goodbyeMorgan Stanley suffers $2.3 billion lossOil rises as

Toyota announces plan to sell 9.85M vehicles in 2008

Toyota (TM - Cramer's Take - Stockpickr) said Tuesday that it expects to increase worldwide vehicle sales by 5% to 9.85 million in 2008.

That figure includes the company's Daihatsu and Hino units. Toyota estimates that total worldwide production also will rise by 5%, to 9.95 million vehicles.
In a news release, Toyota also published expected results for all of 2007 and estimated worldwide sales of 9.36 million, up 6% from 2006.

Toyota plans to sell 9.85 million vehicles worldwide in 2008, the company said Tuesday, setting itself an ambitious target despite worries about a slowing U.S. car market as it tries to become the world's top automaker.
Toyota also said it plans to produce 9.95 million vehicles worldwide next year, up 5% from this year — the same projected on-year percentage jump for Toyota's global sales.
Its recent growth has put Toyota Motor Corp. on track to beat U.S.-based General Motors to become the world's biggest automaker by sales. GM has said it estimates this year's sales to total 9.3 million vehicles, against Toyota's estimate of 9.36 million sales.
Toyota's growth has been based in large part on the popularity of models such as the Camry sedan, Corolla subcompact and the Prius gas-electric hybrid.
Soaring gas prices have dramatically boosted the appeal of smaller fuel-efficient models that are Toyota's main strength.

General Motors has been fiercely fighting back, boosting its overseas business and could yet maintain the top industry spot which it has held for 76 years.
GM has not given a forecast for the number of vehicles it expects to produce or sell in 2008. But the Detroit automaker has the industry record for annual global vehicle sales at 9.55 million vehicles, sold by GM in 1978.
Toyota executives acknowledged Tuesday worries about the U.S. market, which has been hit by the subprime mortgage crisis and soaring oil prices. But they remained upbeat about increasing sales in the key U.S. market — projecting 2.64 million vehicles, edging up 1% from this year.
They were also bullish about prospects for emerging markets such as China, Russia and South America, while being conservative in expectations for Europe at a 2% increase to 1.27 million vehicles, and seeing sales in Japan remain flat at 1.6 million next year.
But Koji Endo, auto analyst with Credit Suisse in Tokyo, said next year will likely prove a challenge even for Toyota, as U.S. economic woes weigh on sales and profits.
But he said the overall optimism for sales growth was "reasonable," given Toyota's recent performance.
"These are targets Toyota is giving, not forecasts, and so they are reasonable," he said.
After the first nine months of this year, Toyota was — at 7.05 million vehicles sold worldwide — trailing GM's sales of 7.06 million vehicles for the same period. The final tally for this year's numbers won't be out until January next year.
GM's spokesman in Tokyo Michihiro Yamamori declined to comment, citing company policy to refrain from commenting on its rivals' targets.
Toyota also said it was preparing to start mass producing lithium-ion batteries for low-emission vehicles.
Lithium-ion batteries, already widely used in laptops and other gadgets, are smaller yet more powerful than the nickel-metal hydride batteries used in gas-electric hybrids like the Prius now.
Lithium-ion batteries will not be used in the Prius, on sale for a decade and the most popular hybrid on the market, according to Toyota.
The lithium-ion battery will be used in a plug-in hybrid, which would recharge from a regular home socket, and travel longer as an electric vehicle than the Prius. Toyota has started tests on its plug-in hybrid, but has not shown a model using the new battery.
Executive Vice President Masatami Takimoto, who oversees technology, said Toyota had developed the lithium-ion battery to a level that it is almost ready for mass production, although that won't start until sometime after next year.
Toyota President Katsuaki Watanabe said the hybrid will be a pillar of Toyota's growth in the years ahead, and he reiterated the plan to offer hybrid versions of all its models sometime after 2020.
As part of its strategy to be ecological and super-efficient in manufacturing — as well as with its products — Toyota will use solar energy and wind power to reduce global-warming emissions at what it called five "sustainable plants." The facility being built in Mississippi, set to be up and running in 2010, will be one such plant, Toyota said.