By Ye Xie and Lukanyo Mnyanda Sept. 16 (Bloomberg) -- The dollar weakened to the lowest level versus the euro in 2009 as a report showed international demand for long-term U.S. financial assets weakened in July. The yen appreciated toward 90 per dollar after incoming Finance Minister Hirohisa Fujii said Japan’s new government is opposed to intervening in currency markets unless swings become excessive. The Australian and New Zealand dollars rose to the highest level in more than a year against the greenback as European and Asian equities and U.S. stock-index futures gained. “The dollar remains under pressure,” said Michael Woolfolk, a managing director in New York at BNY Mellon, the world’s largest custodial bank, with more than $23 trillion in assets under administration. The U.S. currency declined 0.3 percent to $1.4702 per euro at 9:09 a.m. in New York, compared with $1.4658 yesterday. It earlier reached $1.4714, the weakest level since Dec. 18. Japan’s currency was at 132.74 per euro, compared with 133.47. The yen was at 90.26 per dollar, compared with 91.05. The last time the yen was stronger than 90 was on Feb. 12. Australia’s currency bought 87.17 U.S. cents, after rising to 87.28 cents, the strongest since August 2008. New Zealand’s dollar fetched 71.23 U.S. cents and as much as 71.40, also the highest level in more than a year. Signs that the U.S. is emerging from its deepest recession since World War II are encouraging investors to buy higher- yielding currencies at the expense of the dollar. The benchmark rate is 3 percent in Australia and 2.5 percent in New Zealand, compared with Japan’s 0.1 percent and as low as zero in the U.S. Factory Output Industrial production rose 0.6 percent last month, the biggest gain since October, according to the median forecast of 75 economists surveyed by Bloomberg News. The report from the Federal Reserve is due at 9:15 a.m. New York time. Net buying of long-term equities, notes and bonds totaled $15.3 billion for July, compared with purchases of $90.2 billion in June, the Treasury Department said today in Washington. Including short-term securities such as stock swaps, foreigners sold a net $97.5 billion in July, compared with net selling of $56.8 billion the previous month. The MSCI World Index added 0.9 percent, while Europe’s Dow Jones Stoxx 600 Index rose 1.3 percent. Futures on the Standard & Poor’s 500 Index expiring in December increased 0.5 percent. The Dollar Index, which tracks the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell 0.3 percent to 76.336, from 76.544 yesterday. It earlier dropped to 76.187, the lowest since Sept. 23, 2008. Greenspan on Debt Former Fed Chairman Alan Greenspan, speaking in a broadcast to Tokyo clients of Deutsche Bank Securities Inc. today, said if there was a significant issuance of Treasury securities that increased the national debt, “there would be of necessity downward pressure on the dollar.” At the same time, he said, “you can’t say that without saying what the counterparty currency would be.” The U.S. current-account deficit narrowed in the second quarter to $98.8 billion, the Commerce Department reported. The median forecast of 39 economists surveyed by Bloomberg News was for a reduction to $92 billion. A smaller deficit reduces pressure on the dollar by making the country less reliant on foreign capital. The current account is the broadest measure of trade because it includes transfer payments and investment income. The yen rose against the dollar after Fujii, 77, told reporters in Tokyo that recent currency movements “aren’t excessive.” Asked if he’s opposed to intervention, Fujii said, “In principle, yes. Such actions can destroy a free economy.” Intervention in 2004 Japan hasn’t entered the foreign-exchange market since the central bank, at the request of the Finance Ministry, sold a record 14.8 trillion yen ($160 billion) in the first quarter of 2004 in an effort to weaken the currency. “They’ve tried to make it clear they are more tolerant of a strong yen and have also suggested they aren’t convinced intervention is effective,” said Daragh Maher, deputy head of global currency strategy in London at Calyon, the investment- banking arm of Credit Agricole SA. “I think they’ll leave it alone to be honest.” The pound stayed near a four-month low against the euro as a report showed the U.K. jobless rate rose to the highest level since 1995, supporting the case for the Bank of England to keep the benchmark interest rate at a record low of 0.5 percent. The central bank Governor Mervyn King said yesterday policy makers are considering lowering the rate they pay financial institutions to hold reserves at the bank to encourage lending. “It’s real rollercoaster ride for sterling at the moment,” Tom Levinson, a currency strategist in London at ING Bank NV, said in a Bloomberg Television interview. “Comments from Governor King were pretty dovish. That’s obviously put sterling back under pressure.” The pound was at 89.08 pence per euro after earlier reaching 89.31 pence, the weakest level since May 15. Sterling was little changed at $1.6520.

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