Oct. 5 (Bloomberg) -- The dollar fell against the euro for a second day after Group of Seven finance chiefs refrained from calling for measures to stop the U.S. currency’s decline. The yen pared earlier gains against the dollar as Japanese Finance Minister Hirohisa Fujii said the government will intervene if the yen moves in a “biased direction.” Losses in the yen may be tempered in coming months as New York University Professor Nouriel Roubini, who predicted the financial crisis, said a slow economic recovery may disappoint investors. Australia’s dollar rose against the greenback after a report showed the nation’s services shrank at a slower pace. “Given the huge amount of rhetoric from various officials leading up to the meeting, warning in particular about excessive currency strength against the dollar and the negative impact on economic recovery, the relatively weak statement leaves the door open to further dollar weakness over coming weeks,” Mitul Kotecha, head of global foreign-exchange strategy in Hong Kong at Calyon, wrote in a report dated today. The dollar fell to $1.4639 per euro at 6:28 a.m. in London from $1.4576 in New York on Oct. 2. It touched a one-year low of $1.4844 on Sept. 23. It dropped to $1.5991 per British pound from $1.5946, and slid to 1.0313 Swiss francs from 1.0350 francs. The yen declined to 131.41 per euro from 130.90 in New York on Oct. 2. The Japanese currency was at 89.76 per U.S. dollar from 89.81. G-7 Statement The U.S. currency fell after G-7 finance chiefs meeting in Istanbul over the weekend stopped short of sounding alarm at the U.S. currency’s 14 percent decline against a basket of currencies since March. “Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” G-7 officials said in a statement after talks on Oct. 3, repeating language they used in April. A weaker dollar risks hurting economies outside the U.S. by making the exports of companies such as Japan’s Canon Inc. more expensive. The Dollar Index, which tracks the greenback against the currencies of six trading partners including the euro and the yen, lost 0.3 percent to 76.769. Australia’s dollar gained 1 percent to 87.40 U.S. cents from 86.52 after the performance of services index rose 1.3 points to 49.3. The figure is just short of the 50 level separating expansion from contraction. Commonwealth Bank of Australia and the Australian Industry Group released the figure in Sydney today. Fujii’s Comments The yen retreated against 13 of its 16 major counterparts after Japan’s Fujii issued his clearest warning yet that his nation is open to intervening in the currency market. “If currencies show some excessive moves in a biased direction, we will take action,” Fujii said after the G-7 meeting. He declined to say if the yen is trading in such a way. Fujii’s position has shifted since his initial remarks on taking office in September. He formerly opposed seeking a “weak” yen. The currency last week rose to an eight-month high of 88.24 against the dollar, threatening exporters’ profits. Stocks and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors, according to Roubini. “Markets have gone up too much, too soon, too fast,” Roubini said in an interview in Istanbul on Oct. 3. “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U- shaped.” ECB Meeting The European Central Bank will keep its main refinancing rate unchanged at 1 percent at the Oct. 8 meeting, according to all 53 economists surveyed by Bloomberg. “The ECB is likely to leave rates unchanged this week,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. “Given Europe’s rate advantage over that in the U.S., the euro will probably be bolstered.” The dollar also declined on speculation Federal Reserve officials this week will reiterate interest rates will be kept at a record low. New York Fed President William Dudley will speak in New York today. Kansas City Fed President Thomas Hoenig is set to speak at an economic forum in Denver tomorrow. Boston Fed President Eric Rosengren said last week the U.S. central bank and the government should maintain policies that support economic growth until a self-sustaining recovery is assured. “It is important that monetary and fiscal policy continue to support the economy until private-sector spending has resumed, and until we are confident that the recovery will continue,” Rosengren said on Oct. 2 in Boston. The benchmark interest rate is as low as zero in the U.S. and 0.1 percent in Japan, compared with 3 percent in Australia and 2.5 percent in New Zealand, attracting investors to the South Pacific nations’ assets. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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