Nov. 19 (Bloomberg) -- The yen rose against the dollar after global stocks declined and a group of six Arab nations said they will review their fixed exchange rates to the U.S. currency.

The Japanese yen climbed against all 16 of the world's most- active currencies as a deepening U.S. property slump prompted investors to retreat from higher-yielding assets funded by loans in Japan, known as carry trades. European Central Bank President Jean-Claude Trichet said today the Group of 10 nations considered ``disorderly'' currency moves ``undesirable.''

``Higher levels of risk aversion are consistent with yen strengthening,'' said Daragh Maher, senior currency strategist at Calyon in London. ``The yen is sensitive to equity markets. It's an echo of what's happening in the carry trade and of risk appetite in general.''

The yen rose to 110.21 per dollar as of 1:24 p.m. in New York, from 111.09 on Nov. 16. It also climbed to 161.74 per euro, from 162.86. The dollar traded little changed at $1.4669 per euro.

Maher predicts the dollar will fall to $1.50 per euro and the yen will decline to 116 against the U.S. currency by year- end.

Global stocks declined on concern slowing economic growth in the U.S. and China will curb profit. U.S. index futures retreated. The Morgan Stanley Capital International World Index lost 0.3 percent to 1,576.77.

Dollar Pegs

The dollar fell after the Gulf Cooperation Council, which includes Saudi Arabia, United Arab Emirates and Qatar, said members will discuss a proposal next month to change their fixed exchange rates to the dollar. The case for a revaluation will be presented to heads of state in a summit in Doha, Qatar, on Dec. 3-4, Secretary General Abdul Rahman al-Attiyah told reporters yesterday in Riyadh, Saudi Arabia.

Gulf states have been ``aggressive buyers of euros over the last few years. We're not likely to get a one-off reduction in the share of dollars in reserves from these countries,'' said David Woo, global head of foreign exchange strategy at Barclays Capital. ``The impact on the euro-dollar is going to be fairly limited.''

Barclays forecasts the dollar at $1.47 per euro by year-end.

Trichet said ``excess volatility and disorderly movements in foreign exchange rates are undesirable for economic growth,'' at a press conference in Cape Town today. He said the Group of 10 Nations ``all agree'' that such movements hurt economic growth.

The pound dropped as much as 0.5 percent against the dollar as a report showed house prices fell in November, strengthening speculation the Bank of England will lower interest rates to bolster the economy. The U.K. currency last traded little changed at $2.0546, from $2.0547.

The yen strengthened against other popular targets of the carry trade such as the Australian and Canadian dollars. Interest rates in those countries are as much as 6.25 percentage point higher than Japan's 0.5 percent rate.

Carry Trades

Carry-trade investors borrow money in low-yielding economies such as Japan and Switzerland and lend out the funds in high- yielding countries to profit from the spread. The risk is that currency moves wipe out earnings. When the trade weakens, they sell high-yielding assets and buy yen to repay borrowings.

The yen climbed as much as 1.3 percent against the Australian dollar to 98.25 and 1.7 percent against the Norwegian krone to 20.0219.

The U.S. currency has declined 4.7 percent against the yen and 3.7 percent against the Swiss franc in November as the worst housing market in 16 years caused the Fed to cut rates to 4.5 percent and companies reported more losses on securities tied to U.S. subprime mortgages.

``The adjustment in the housing market still has a way to go,'' Federal Reserve Bank of Minneapolis President Gary Stern told reporters in Singapore today. He added, though, that U.S. consumers are in ``reasonably good shape.''

Rate Speculation

Futures trading shows the odds on the Fed cutting interest rates a quarter-point to 4.25 percent this year are 80 percent, calculations by Bloomberg show.

``The U.S. housing slump has not bottomed out yet,'' said Kazuo Mizuno, chief economist in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan's largest publicly traded lender by assets. The Fed may cut rates to 2.5 percent by the end of 2008 and the dollar will keep suffering, Mizuno said.

The dollar may fall to 100 yen this year, Mizuno said.

Faster growth and rising import prices caused by the sinking dollar are spurring inflation in Gulf economies, increasing pressure to sever fixed-exchange rates with the U.S. currency. Saudi Arabia's consumer prices rose at a record 4.9 percent pace in August, after averaging less than 1 percent over the last decade, government figures show.

``The dollar peg is doomed,'' said Jim Rogers, chairman of New York-based Rogers Holdings and a former partner of hedge fund manager George Soros.

Saudi Comments

Saudi central bank Governor Hamad Saud al-Sayari said in an interview at the weekend that Gulf central bank governors agreed not to change their exchange-rate policies after discussing revaluation a few weeks ago.

The U.S. Dollar Index traded on ICE Futures U.S. in New York, which includes the euro, pound and Japan's yen, reached a record low of 74.978 on Nov. 9, the weakest since the index started in 1973. It last stood at 75.84.

The Saudi riyal was quoted at 3.7215 per dollar by BNP Bahrain, compared with a close of 3.7295 on Nov. 16. Saudi riyal 12-month forwards climbed 0.5 percent last week to 3.69.

U.A.E. central bank Governor Sultan Bin Nasser al-Suwaidi said last week his bank has a target of moving 10 percent of its currency reserves into euros and has ``already diversified to some extent.'' The $50 billion Qatar Investment Authority said Sept. 4 it was looking to buy assets in Asia to counter a weak dollar.

The Gulf Cooperation Council comprises Saudi Arabia, U.A.E., Qatar, Oman, Bahrain and Kuwait. The first five peg their currencies to the dollar, while Kuwait links its currency to a basket.

OPEC Meeting

At the Organization of Petroleum Exporting Countries summit in Riyadh yesterday, Saudi officials rejected a suggestion by Iran and Venezuela to discuss ending the practice of pricing crude in dollars.

``Surprisingly enough, the main issue is not so much whether they're going to move away from the pegs,'' Woo said. ``It's whether there's going to be a move to price oil contracts in euros or according to a currency basket. The psychological impact for the market is going to be fairly substantial and that could certainly prompt some dollar selling.''

To contact the reporters on this story: Kim-Mai Cutler in London at kcutler@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net

Last Updated: November 19, 2007 08:35 EST