UPDATES ON SEPT 23 2008

SEPT 23 TUESDAY

Dollar Volatility Rises as Banks May Remain Reluctant to Lend .

Volatility implied by dollar-yen options rose on speculation a

U.S. government plan to buy troubled assets and central

banks' efforts to increase liquidity will fail to stem a

global credit crisis.

The dollar declined to 106.59 yen at 2:58 p.m. in Tokyo from

107.45 yen late in New York on Sept. 19.

Implied volatility for dollar-yen options expiring in one month

rose to 16.41 percent from 16 percent at the end of last week.

The dollar's one-month 25-delta risk-reversal rate against the

yen widened to minus 3.68 percent from minus 3.64 percent on

Sept. 19, indicating a greater premium for dollar puts that allow

sales over dollar calls that grant the right to buy.

U.S. officials devised the bad asset plan after losses on mortgage

-related investments led this month to the bankruptcy of

Lehman Brothers Holdings Inc. and government bailouts f

or American International Group Inc. and mortgage

financiers Freddie Mac and Fannie Mae.

The Federal Reserve led central banks in Europe and Asia in

pouring cash into global financial markets over the past

week due to a crisis of confidence.