By Matthew Brown and Yoshiaki Nohara Nov. 17 (Bloomberg) -- The dollar and yen advanced versus the euro as International Monetary Fund Managing Director Dominique Strauss-Kahn said the global economic recovery may be sluggish, discouraging demand for higher-yielding assets. Australia’s dollar fell from almost the highest level in 15 months as minutes from the Reserve Bank’s meeting cast doubt on a third straight increase in lending rates. Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank’s policy will help support a “strong” dollar. “It’s a risk-off day, which is seeing the euro consolidate against the dollar,” said Neil Mellor, a currency strategist at Bank of New York Mellon Corp. in London. The dollar strengthened 0.7 percent to $1.4867 versus the euro at 7:31 a.m. in New York, from $1.4970 yesterday. The euro decreased 0.4 percent to 132.80 yen, from 133.33. The dollar climbed 0.3 percent to 89.31 yen, from 89.05. The global economic recovery is likely to be slow, although a double-dip is unlikely, Strauss-Kahn said at a briefing today in Beijing. China’s yuan may be added in the future to the basket of currencies that sets the value of IMF monetary units called special drawing rights, Strauss-Kahn said. Governor Zhou Xiaochuan of China’s central bank advocated earlier this year a greater use of SDRs and called for a “super- sovereign reserve currency.” President Barack Obama said he emphasized to Chinese President Hu Jintao the need for China to keep moving toward a more market-based valuation for the yuan. Obama on China “I was pleased to note the Chinese commitment made in past statements to move toward a more market-oriented exchange rate over time,” Obama said during a joint appearance with Hu after a meeting in Beijing today. Obama said he noted that “doing so based on economic fundamentals would make an essential contribution to the global rebalancing effort.” China’s central bank said last week foreign-exchange policy will take into account global capital flows and changes in major currencies and dropped language on keeping the yuan “basically stable” from a report. The yuan has traded at about 6.83 per dollar since July 2008 after a 21 percent gain in the previous three years. The link of the yuan to the weakening dollar has pushed the Chinese currency down 16 percent versus the euro and 8 percent against the yen over the past year, adding to pressure from China’s export competitors to let the yuan appreciate. Australia’s dollar dropped 1 percent to 92.72 U.S. cents after touching 94.06 cents yesterday, the highest level since August 2008. ‘Open Question’ The pace of interest-rate increases is an “open question” as policy makers balance the risk of keeping borrowing costs too low against an economy that may cool as government stimulus abates, according to minutes of the Reserve Bank’s November meeting, when it increased the benchmark overnight cash rate target to 3.5 percent. “If economic conditions evolved as expected, further gradual adjustment in the cash rate would most likely be appropriate over time,” the minutes said. The pound strengthened as much as 0.6 percent to a two- month high of 88.49 pence per euro after a Bank of England policy maker, Andrew Sentance, said Britain is returning to growth. The U.K. currency extended gains after a report from the Office for National Statistics showed annual inflation accelerated in October for the first time in eight months. Sentence’s speech “added to the positive bias in sterling,” said Henrik Gullberg, a currency strategist in London at Deutsche Bank AG, the world’s largest currency trader. “The data generally has been very strong.” Dollar Index The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency’s value against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, increased 0.7 percent to 75.408. The gauge touched 74.679, the weakest level since August 2008, even after Bernanke said yesterday that the Fed is “attentive” to changes in the dollar’s value and “will help ensure that the dollar is strong.” “Bernanke’s speech yesterday was significant for the dollar,” said David Deddouche, a foreign-exchange strategist in Paris at Societe Generale SA. “Should the dollar drop significantly more in the medium term, its inflationary impact through commodity prices will now be finely monitored, and the corollary is that this factor could be one of the reasons for a Fed or Treasury intervention.” To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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