BLBG: Japanese Yen, Dollar Rebound as Stock Markets Reverse Gains
Sept. 10 (Bloomberg) -- The yen and the dollar rose against higher-yielding currencies as European stocks snapped a five-day rally after China’s Premier Wen Jiabao cast doubt on the pace of the nation’s economic recovery.
The yen gained the most against the Norwegian krone and South African rand after Wen said China’s rebound “is unstable, unbalanced and not yet solid,” fueling concern the global recession may not end anytime soon. The U.S. currency rebounded from near the lowest level since December against the euro. The pound rose after the Bank of England left its bond-buying program and benchmark interest rate unchanged.
“Equity markets are giving back their gains and that’s caused the dollar to rebound,” said Jeremy Stretch, a senior currency strategist at Rabobank International in London. “The currencies that are perceived to be most likely to benefit from a recovery are on the back foot.”
The dollar strengthened to $1.4533 per euro as of 7:10 a.m. in New York, from $1.4557 yesterday, when it reached the weakest level since Dec. 18. The yen was little changed at 133.94 per euro, after earlier weakening to 134.38. The Japanese currency traded at 92.17 per dollar from 92.04.
Europe’s Dow Jones Stoxx 600 Index declined 0.3 percent, reversing an earlier gain of as much as 0.6 percent. Futures on the Standard & Poor’s 500 Index lost 0.2 percent, after advancing by as much as 0.5 percent.
China’s stimulus measures may fade and some measures may take some time to work, Wen said today at the World Economic Forum meeting in Dalian.
The pound advanced to the highest level in almost three weeks against the dollar after the Bank of England said it won’t expand its 175 billion-pound ($289 billion) asset-purchase program and kept the nation’s main interest rate at 0.5 percent. That matched a unanimous prediction of 35 economists in a Bloomberg survey.
The British currency was at $1.6558, from $1.6548 yesterday, and 87.75 pence per euro, from 88.01.
To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
