The dollar declined for a third day against the euro and the yen weakened before reports forecast to show German exports increased and U.S. initial jobless claims fell, adding to signs the global economy is improving. South Korea’s won traded near the highest level in more than two years against the dollar on bets the Bank of Korea will raise interest rates this week after Chinese policy makers boosted borrowing costs yesterday to curb inflation. Australia’s dollar was about 0.9 percent below this year’s high versus the greenback before a report tomorrow forecast to show the nation had its longest stretch of jobs growth since 2007. “Economies around the world appear to be recovering nicely,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “Sentiment is likely to be ‘risk on’ and the bias is for the dollar and the yen to be sold.” The dollar fell to $1.3639 per euro as of 2:02 p.m. in Tokyo from $1.3625 in New York. It touched $1.3689 yesterday, the weakest since Feb. 3. The euro rose to 112.51 yen from 112.23 yen, after earlier climbing to 112.54 yen, the highest level since Feb. 3. The yen declined to 82.49 per dollar from 82.36 after reaching 82.51, the lowest since Jan. 28. The Swiss franc was little changed after declining to 0.9655 per dollar, the lowest since Jan. 21. It touched 1.3160 per euro, the weakest since Dec. 3. Bernanke Testimony German seasonally adjusted exports rose 1 percent in December from the previous month, the biggest increase since September, according to the median estimate of economists surveyed by Bloomberg News before the data today. The number of Americans filing first-time claims for jobless benefits fell to 410,000 last week from 415,000 the prior week, another survey showed ahead of the report tomorrow. Losses in the dollar were limited before U.S. Federal Reserve Chairman Ben S. Bernanke’s testimony today at a hearing of the House Budget Committee. “Bernanke is likely to emphasize fiscal tightening,” analysts led by Hans-Guenter Redeker, London-based global head of foreign-exchange strategy at BNP Paribas SA, wrote in a research note yesterday. “While this would normally be negative for a currency, it will prove positive for the dollar in this case, given concerns over sovereign risk.” U.S. President Barack Obama has increased the nation’s publicly traded debt to a record $8.97 trillion, double the 2007 level, as he boosts spending to sustain the economy’s expansion. South Korean Finance minister Yoon Jeung Hyun said today that his government needs to act “preemptively” to curb inflation pressures because price gains can weaken the foundation of a stable economy. The Bank of Korea will hold a policy meeting on Feb. 11. China’s Rate Policy China’s central bank increased interest rates for the third time since mid-October ahead of a report forecast to show inflation accelerated to the fastest pace in 30 months. The benchmark one-year lending rate will increase to 6.06 percent from 5.81 percent, effective today, the People’s Bank of China said on its website yesterday. “Some think Bank of Korea may follow China in hiking rates this week,” said Kim Jin Ju, a currency trader at Korea Exchange Bank in Seoul. “U.S. stocks rose yesterday and this is boosting the won.” The won was little changed at 1,105.30 per dollar from 1,104.68 yesterday. It reached 1,101.10 on Feb. 3, the strongest since September 2008. The Standard & Poor’s 500 Index advanced 0.4 percent yesterday, climbing for a fourth day. Australia’s currency bought $1.0132 from $1.0146, nearing this year’s high of $1.0228 set on Jan. 3. ‘Possible’ N.Z. Recession Employers in Australia added 17,500 jobs in January, an 11th straight month of gains, according to economists surveyed by Bloomberg News before the statistics bureau reports the data tomorrow. The unemployment rate was unchanged at 5 percent, the lowest since January 2009, the survey shows. New Zealand’s dollar depreciated against all of its 16 major counterparts after Finance Minister Bill English told parliament it was “possible” the nation’s economy slipped into recession in the second half of last year. “English’s comments continue a tried and tested tradition of kiwi leaders trying to talk the New Zealand dollar down,” said Adrian Foster, Hong Kong-based head of financial-market research for Asia at Rabobank Groep NV. The so-called kiwi fell 0.5 percent to 77.15 U.S. cents, approaching the lowest level since Jan. 26. English told parliament’s finance and expenditure select committee that the nation’s economic recovery is going to have some challenges. To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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