The dollar fell against higher- yielding currencies as Asian stocks gained and U.S. equity futures fluctuated before reports forecast American small- business and consumer confidence improved. The U.S. currency stayed lower after China raised key interest rates by 25 basis points. The pound weakened after the U.K. increased a levy on bank balance sheets. South Korea’s won rose on speculation the central bank will increase interest rates this week to combat inflation. Taiwan’s dollar climbed past NT$29 to the greenback for the first time since 1997 on speculation the central bank is letting the currency strengthen as foreign funds buy the island’s assets. “In terms of risk I wouldn’t say people are really bulled up, but there’s no reason to be quite negative right now so just expect the slow grind in risk appetite to continue,” said Geoffrey Yu, a foreign-exchange strategist at UBS AG in London. “If you want to be long risk then you go short dollars and short yen.” The dollar weakened 0.5 percent to $1.3648 per euro as of 11:30 a.m. in London. The yen depreciated 0.2 percent against the common currency to 112.01. The dollar fell 0.3 percent to 82.05 yen. The MSCI Asia Pacific Index of shares gained 0.2 percent, and futures on the Standard & Poor’s 500 Index advanced less than 0.1 percent. U.S. Confidence The euro stayed higher against the majority of its most- traded peers after the National Federation of Independent Business said German industrial production unexpectedly contracted in December. The gauge fell 1.5 percent, compared with a median estimate for a 0.2 percent gain. An index of confidence among U.S. small businesses rose to 94.0 in January, the most since 2007, from December’s 92.6, the Washington-based National Federation of Independent Business is forecast to say today, according to 12 economists in a Bloomberg survey. A separate survey predicts a consumer confidence gauge rose to minus 40 this week, equal to the most since April 2008, from minus 41 a week earlier. The greenback slid versus 15 of its 16 most-traded peers tracked by Bloomberg before Federal Reserve Chairman Ben S. Bernanke testifies tomorrow at a hearing of the House Budget Committee. Fed Bank of Dallas President Richard W. Fisher said yesterday he’s unlikely to support further monetary accommodation and he’ll vote against any new quantitative easing beyond the $600 billion program of Treasury purchases. Krona High A government report last week showed the U.S. unemployment rate unexpectedly dropped to 9 percent in January from 9.4 percent the previous month. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, declined 0.3 percent to 77.76. Sweden’s krona strengthened for a second day against the dollar and touched a 10-year high versus the euro on speculation global growth will spur demand for the Nordic nation’s assets. The currency strengthened 0.5 percent to 6.4294 per dollar. It was little changed at 8.7708 per euro after appreciating to 8.7642, the strongest level since December 2000. The pound slipped against 14 of its 16 most actively traded counterparts as U.K. Chancellor of the Exchequer George Osborne increased a tax on banks’ balance sheets to raise an extra 800 million pounds ($1.3 billion) as he continues to negotiate lending targets and curbs on pay. The British currency was little changed at $1.6127 after climbing as high as $1.6163. It weakened 0.5 percent against the euro to 84.71 pence. Korean Won The won strengthened 0.3 percent to 1,104.68 per dollar. Bank of Korea will boost the seven-day repurchase rate by 25 basis points to 3 percent at the meeting, according to eight out of 11 economists in a Bloomberg News survey. Three expect no change. President Lee Myung Bak last month declared “war” on inflation, saying it must be contained at 3 percent to protect people on low incomes. “People are expecting a rate hike from the Bank of Korea later this week and this is boosting the won,” said Drew Na, a Seoul-based currency trader at Standard Chartered First Bank Korea Ltd., a unit of Standard Chartered Plc. Taiwan’s dollar appreciated 0.3 percent to NT$28.922 against its U.S. counterpart, according to Taipei Forex Inc. It earlier reached 28.897, the strongest level since October 1997. Overseas investors bought $3.4 billion more Taiwanese shares than they sold this year through Jan. 28, stock exchange data showed. The central bank has bought the U.S. dollar near the close of trading regularly since April to check gains in the local currency, according to traders who asked not to be identified. Authorities seem “to be letting the Taiwan dollar be determined by the market,” said Henry Lin, a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “They can’t hold the price at NT$29. If Taiwan stocks are strong, then the currency will continue to be strong.” To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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