By Oliver Biggadike and Lukanyo Mnyanda Sept. 15 (Bloomberg) -- The dollar advanced versus the yen after a government report showed U.S. retail sales rose in August more than economists forecast. The South African rand gained the most versus the yen among its major counterparts as the MSCI World Index stayed near an 11-month high, increasing demand for higher-yielding assets. The pound slid to the lowest level since May against the euro after Bank of England Governor Mervyn King said the bank may lower the rate paid to commercial lenders. “It’s a reaction to good news,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. The yen weakened 0.6 percent to 91.46 per dollar at 8:45 a.m. in New York, from 90.94 yesterday. Japan’s currency slid 0.3 percent to 133.37 per euro, from 132.94. The euro traded at $1.4581, compared with $1.4618 yesterday, when it rose to the highest level since Dec. 18. President Barack Obama, speaking to Bloomberg News one year after the bankruptcy of Lehman Brothers Holdings Inc. sent financial markets into turmoil, warned against cutting off government aid “so soon that the recovery doesn’t take flight.” Writedowns and credit losses at the world’s biggest financial institutions since the start of 2007 climbed to more than $1.6 trillion, data compiled by Bloomberg show. U.S. retail sales excluding cars gained 1.1 percent last month after a revised 0.5 percent drop in July, the Commerce Department said today. The median forecast of 66 economists in a Bloomberg News survey was for a 0.4 percent gain. Norway’s Krone Norway’s krone appreciated as much as 0.2 percent to 8.6244 versus the euro and was later little changed at 8.6393 after Prime Minister Jens Stoltenberg’s Labor party-led coalition was re-elected. The krone traded at 5.9144 per dollar, compared with 5.9089 yesterday. Stoltenberg’s Labor Party and its partners, the Socialist Left and the Center Party, secured 86 out of 169 seats in parliament, after 99.9 percent of the vote was counted. It makes Stoltenberg, 50, the first Norwegian premier to be re-elected since 1993. The euro earlier dropped after the ZEW Center for European Economic Research said its index of German investor and analyst expectations rose to 57.7 this month, from 56.1 in August. Economists forecast a reading of 60, according to a Bloomberg News survey. The pound traded at 88.66 pence per euro, compared with 88.17 pence yesterday and 88.77 pence earlier, the weakest level since May 18. It declined 0.6 percent to $1.6490, from $1.6583 yesterday, after earlier rising to $1.6658. BOE’s View King told lawmakers in London the Bank of England doesn’t want “reserves to be unnecessarily high” and is “looking at” lowering the rate it pays banks to deposit money with the central bank. The Bank of England said last week it would maintain its 175 billion pound ($289 billion) asset-purchase program and kept its benchmark interest rate at 0.5 percent. The pound rose earlier after the London-based Royal Institution of Chartered Surveyors said more surveyors reported a gain in British home values than a drop for the first time in two years. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, rose for a second day. The gauge climbed 14 percent from Sept. 15, 2008, to its high this year on March 4, 2009, as investors sought the safety of U.S. assets following the collapse of Lehman. The index since then fell by the same amount to 76.854 today as investors focused on deficits in the U.S. and interest rates. U.S. Rescues U.S. authorities have rescued, taken over or helped to sell Bear Stearns Cos., Merrill Lynch & Co., American International Group Inc., Fannie Mae, Freddie Mac and Citigroup Inc. The euro climbed to a nine-month high this week after falling to a 2 1/2-year low of $1.2330 in the month after Lehman went bankrupt. Federal Reserve Bank of San Francisco President Janet Yellen said policy makers must guard against inflation becoming too low rather than too high. “We face an economy with substantial slack, prospects for only moderate growth and low and declining inflation,” Yellen said yesterday in a speech in San Francisco. Until the time comes to raise interest rates, “we need to defend our price stability goal on the low side and promote full employment.”

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