Oct. 22 (Bloomberg) -- The dollar advanced after China’s economic growth missed some analysts’ estimates and speculation mounted the nation will pare stimulus spending, spurring demand for the U.S. currency as a refuge. The dollar rose the most against higher-yielding currencies such as the South African rand and New Zealand dollar as stock markets declined worldwide. China reported gross domestic product expanded at the fastest pace in a year and said yesterday that policy makers will increase their focus on inflation. Sweden’s krona fell against the dollar and euro after the Riksbank kept the benchmark interest rate at a record low and repeated its intention not to raise rates for another year. China’s data “is consistent with an easing off of the economic stimulus as we go forward, which you could argue is occurring already to some extent,” said Steven Barrow, head of Group of 10 research at Standard Bank Plc in London. “The dollar is taking its cue from stocks.” The dollar strengthened to $1.4964 per euro at 9:58 a.m. in London, from $1.5016 in New York yesterday, when it touched $1.5046, the weakest level since August 2008. The U.S. currency was at $1.6518 per pound, from $1.6608 yesterday. The yen weakened to 91.28 per dollar, from 90.97, and traded at 136.61 per euro, unchanged from yesterday. South Africa’s rand slid 1.2 percent to 7.5037 per dollar. New Zealand’s currency was at 75.32 U.S. cents, from 76.05 cents yesterday, when it advanced to the strongest level since July 2008. Stock Declines Europe’s Dow Jones Stoxx 600 Index dropped 1.7 percent, after the Nikkei 225 Stock Average retreated 0.6 percent. U.S. stock index futures fell. China’s GDP expanded 8.9 percent in the third quarter, the nation’s statistics bureau said today. The median estimate of 34 economists surveyed by Bloomberg was for a 9 percent expansion. Inflationary expectations are increasing as prices rise month-on-month, statistics bureau spokesman Li Xiaochao said today at a press briefing in Beijing. Sweden’s currency declined 1 percent to 6.9148 against the dollar and was 0.6 percent weaker at 10.3485 per euro. The Stockholm-based Riksbank’s decision to keep its seven-day repo rate at 0.25 percent was predicted by all 26 economists in a Bloomberg survey. Ifo Report “We expect the krona to stay lower against the euro in the wake of the Riksbank’s dovish remarks,” said Roberto Mialich, a senior global-currency strategist in Milan at UniCredit SpA. The euro’s losses were tempered before a report tomorrow that is forecast to show German business confidence improved. The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 the previous month, according to a survey. European Central Bank council member Erkki Liikanen said two days ago on Finland’s YLE Radio Suomi that the 16-nation euro-area economy is no longer weakening. “The euro-zone’s economy appears to be recovering more quickly than what we’re seeing in the U.S. and Japan,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The euro will likely gain further.” Traders maintained bets the ECB will keep its benchmark interest rate at 1 percent until the end of the first quarter next year. The implied yield on the three-month Euribor futures contract for March 2010 delivery declined 2 basis points to 1.05 percent. The South Korean won declined for a second day against the dollar after Yonhap News said South Korea is studying measures to reduce currency volatility, citing government officials it didn’t identify. “Upside in the won to the end of the year is limited because of the government,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. The won fell 0.9 percent to 1,189.75 per dollar. The currency reached 1,155.05 on Oct. 15, the strongest level since September 2008. To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net

Source