Yen advances amid global currency-war rhetoric

Pound Drops

Sterling declined for a fourth day versus the dollar, the longest losing stretch since November, and weakened against the euro as the World Bank lowered its global growth forecast. The pound lost 0.4% to $1.60 and touched $1.5976, the lowest level since Nov. 28. It depreciated 0.3% to 83.07 pence per euro.

The World Bank cut its growth forecast for 2013 as austerity measures, high unemployment and low business confidence weigh on economies in developed nations. It projected the world economy will expand 2.4%, down from a June forecast of 3%, after growing 2.3% in 2012.

The Swiss franc strengthened for the first time in five days against the euro today, advancing 0.2% to 1.2381. It slid yesterday to 1.2413, the weakest level in 13 months.

Biggest Loser

The yen tumbled 6.1% over the past month against nine other developed-market peers tracked by Bloomberg Correlation-Weighted Indexes amid speculation the BOJ will step up measures to boost the economy that may weaken the currency. It was the biggest loser in the group. The dollar rose 0.2%, and the euro climbed 1.2%.

Policy makers across the world’s leading economies are advocating weaker currencies as a way to boost economic growth. Switzerland capped the franc’s appreciation against the euro at 1.20 in 2011, while newly elected Japanese Prime Minister Shinzo Abe’s campaign to boost the economy and seek a more aggressive central bank has driven down the yen.

“Japan is weakening the yen, and other countries may follow,” Bank Rossii First Deputy Chairman Alexei Ulyukayev said at a conference in Moscow today. Reciprocal devaluations would hurt the global economy, Ulyukayev said.

The Bank of Japan will review its 1% inflation goal at a policy meeting on Jan. 21-22. Abe has called for the target to be doubled.

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