Euro declines on Europe political concern; yen touches 2010 low

Yen Weakens

Barclays Plc raised its forecasts for the euro against the dollar to take into account gains that pushed the shared currency to the strongest level since November 2011 last week. The euro will drop to $1.32 in six months and $1.28 in a year, higher than from previous estimates of $1.26 and $1.22, strategists Raghav Subbarao and Guillermo Felices in London wrote today in a note to clients.

The yen fell against the dollar, extending a record 12 straight weeks of declines, as Prime Minister Shinzo Abe’s administration presses the central bank to ease monetary policy further to beat deflation.

Finance Minister Taro Aso said yesterday the government is imitating his Depression-era predecessor, Korekiyo Takahashi, who told the Bank of Japan to underwrite government debt to fund deficit spending.

‘Accommodative Stance’

“The yen weakness story remains on expectations that the BOJ will keep its accommodative stance,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo.

The yen tumbled 16% over the past three months, the biggest decline among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro gained 4.8% and the dollar dropped 1.6%.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S trading partners, gained 0.4% today to 79.417.

South Korea’s won rose the most in 14 months against the dollar after U.S. and Chinese reports added to signs of recovery in the world’s largest economies and comments from a Bank of Korea official eased intervention concern.

The currency climbed from a three-month low after official reports showed U.S. employers added workers last month and China’s services industry grew at the fastest pace since August. Bank of Korea board member Moon Woo Sik said it’s too early for any central bank response to the yen’s slide against the won.

The won appreciated 1.2% to 1,084.78 per dollar at the close of trading in Seoul, the biggest advance since December 2011.

Bloomberg News

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