The yen weakened versus all of its 16 most-traded counterparts as stocks around the world gained, reflecting reduced haven demand.
The dollar advanced versus the Japanese currency before the Federal Reserve starts a two-day policy meeting tomorrow, as investors weigh whether the central bank will curb bond purchases. Australia’s dollar rose against all except one of its major peers amid demand for higher-yielding assets. The euro climbed against the yen as data showed the 17-nation bloc’s trade surplus was at almost a record high in April.
“It looks like there’s some risk-on back on the table,” said Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc., by phone from New York. “The obvious focus on the week is going to be the Fed meeting, and I think we’re going to sidestep around that until then.”
The yen declined 0.6% to 94.90 per dollar at 10:24 a.m. New York time, after rising 3.3% last week, the most since July 2009. Japan’s currency slid 0.8% to 126.60 per euro after appreciating 2.7% last week, the most since the five days ended July 6. The dollar was little changed at $1.3340 per euro.
Trading in over-the-counter foreign-exchange options totaled $11.3 billion, compared with $34.6 billion on June 14, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-yen exchange rate was $3.8 billion, the largest share of trades at 33%. Dollar-pound options were the second most-actively traded, at $1.2 billion, or 11%.
Yen-dollar options trading was 13% less than the average for the past five Mondays at a similar time in the day. Dollar-pound options trading was 83% more than average.
India’s rupee dropped the most in a week as the central bank left borrowing costs unchanged amid concern U.S. monetary policy makers will signal a reduction in asset purchases that have boosted inflows to emerging markets.
The Reserve Bank of India held its repurchase rate at 7.25% today. The rupee slid 0.6% to 57.8663 per dollar, the biggest drop since June 10.
South Korea’s currency recovered from almost a two-month low after the government said it has several market-stabilizing measures ready to protect against external shocks. The won fell as much as 0.3% before closing unchanged on the day at 1,126.25 per dollar.