Yen Falls Versus Euro on Recovery Signs, Eased Greece Concern

By Ben Levisohn and Lukanyo Mnyanda

April 9 (Bloomberg) -- The yen fell for a second day against the euro as signs the global economy is improving and speculation that Greece will get an international bailout to avoid a default damped demand for Japan’s currency as a refuge.

The yen weakened against most of its major counterparts including the New Zealand dollar and South Korean won as stocks rose a day after European Central Bank President Jean-Claude Trichet said a default by Greece is “not an issue.” Canada’s dollar fell from parity with its U.S. counterpart as data showed fewer jobs were added in March than forecast.

“The market has been tending to look at the glass half full,” said Samarjit Shankar, a managing director in the foreign-exchange group in Boston at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $20 trillion in assets under administration. “Comments by Trichet raised hopes that the bailout would be sufficient to prevent doomsday scenarios, and the market has gone long risk.” A long position is a bet a currency or security will strengthen.

The yen depreciated 0.3 percent to 125.12 per euro at 9:13 a.m. in New York, from 124.75 yesterday, and fell 0.2 percent to 93.54 per dollar, from 93.38. The euro advanced 0.1 percent to $1.3378, from $1.3361.

Every major stock market in Europe advanced after Germany’s Federal Statistics Office said exports rose 5.1 percent in February after dropping a revised 6.5 percent the previous month. The MSCI World Index advanced 0.4 percent.

Pound Rises

Trichet said in an interview with Italy’s Il Sole-24 Ore newspaper that a European Union and International Monetary Fund plan to avoid a default by Greece probably won’t be needed. The ECB chief is scheduled to speak in Milan today.

Billionaire investor George Soros said the EU should offer Greece loans more cheaply than it can borrow from investors to avoid pushing the nation into a “death circle.”

“Greece should not default, and there is a solution,” Soros told Bloomberg Television today. “There is a need to understand that when there is a rescue effort, which Europe is now putting together, it has got to be at a concession rate of interest, not at the market rate, because the market rate reflects only uncertainties and doubts about the political will to have a rescue.”

The pound strengthened 0.4 percent to $1.5345 and appreciated 0.3 percent to 87.21 pence per euro in its 10th straight day of gains versus the common currency.

The cost of goods at U.K. factory gates increased a greater-than-forecast 0.9 percent in March from the previous month, the Office for National Statistics said today in London.

South Korean Won

South Korea’s won gained for a second week after EPFR Global reported equity funds focused on developing nations took in the most money in six months in the week ended April 7.

The won was also supported by speculation China, the biggest buyer of South Korean exports, will let its currency strengthen. U.S. Treasury Secretary Timothy F. Geithner met in Beijing yesterday with Chinese Vice Premier Wang Qishan amid rising pressure from American lawmakers for the yuan to be allowed to appreciate.

“It’s just a matter of timing” before China’s currency appreciates, David Bloom, London-based global head of currency strategy at HSBC Holdings Plc, said in a Bloomberg Television interview. “We’re expecting 5 percent appreciation by the end of the year and another 5 percent in 2011. It’s something slow and gradual but when you accumulate it, it’s a reasonable move.”

The won rose 0.5 percent today to 1,118.15 per dollar.

Canadian Currency

Canada’s dollar fell against most major currencies after the nation’s statistics agency said the economy gained 17,900 jobs in March after adding 20,900 in the previous month, below the median forecast of 22 economists in a Bloomberg News survey for an increase of 26,000. Canada’s unemployment rate held at 8.2 percent.

The Canadian currency weakened as much as 0.6 percent in the biggest intraday decrease since March 24 before trading at C$1.0047 per U.S. dollar, down 0.3 percent from yesterday’s close at C$1.0021.

The currency touched a level stronger than parity with the U.S. currency on April 6 for the first time since July 2008 and also reached that level on April 7 and today.

To contact the reporters on this story: Ben Levisohn in New York at blevisohn@bloomberg.net; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

Last Updated: April 9, 2010 09:15 EDT