The yen slid to the weakest level in almost six months versus the dollar (FOREX:USDJPY) as demand for the safety of the currency waned after an accord was struck to set limits on Iran’s nuclear program.
Japan’s currency depreciated to a four-year low against the euro before a report this week economists said will show inflation accelerated in October. The shared European currency declined versus the dollar after a policy maker said the European Central Bank is technically prepared to make its deposit rate negative. The greenback advanced against the majority of its 16 most-traded peers. Thailand’s baht dropped to an 11-week low amid anti-government protests.
“The risk-on environment, along with the nuclear pact signed by Iran, has certainly taken the pressure off haven currencies like the yen,” Ravi Bharadwaj, a Boston-based senior market analyst at Western Union Business Solutions, a unit of Western Union Co., said in a phone interview. “The ECB in recent days have talked up the possibility of cutting rates to boost growth in the union.”
The yen fell 0.4% to 101.71 per dollar at 1:32 p.m. New York time after reaching 101.92, the weakest since May 29. It traded at 137.44 per euro after touching 137.99, the weakest since October 2009. The dollar added 0.3% to $1.3514 against Europe’s shared currency.
The Bloomberg U.S. Dollar Index, which tracks the currency against 10 major counterparts, rose 0.3% to 1,021.48.
Protests in Thailand spread to military bases, government offices and television stations today after more than 100,000 people joined rallies yesterday against Prime Minister Yingluck Shinawatra. Global funds pulled a net $2.1 billion from Thai bonds and equities this month through Nov. 22, official data show.
“Investors want to stay away from Thailand amid concern the protests will intensify or lead to violence,” said Shigehisa Shiroki, chief trader on the Asian and emerging- markets team at Mizuho Bank Ltd. in Tokyo. “The political concern encouraged investors to take some money out from Thailand.”
The baht fell 0.7% to 32.04 per dollar after touching 32.08, the weakest level since Sept. 11.
India’s rupee rose the most among emerging-market currencies on optimism a drop in oil costs after Iran’s nuclear pact will help shrink the South Asian nation’s current-account deficit.
Iran agreed to curtail its nuclear activities and in return won an easing of “certain sanctions” on oil, auto parts, gold and precious metals. The deal, which is reversible, was announced yesterday after five days of talks in Geneva.