The yen fell against all its most-traded counterparts after the Bank of Japan (BOJ) said it would increase the size of its asset-purchase fund.
Japan’s currency fell to a six-month low versus the US dollar in its biggest weekly loss against the greenback since November last year, as better-than-expected economic data damped expectations of further monetary easing in the US. The euro fell versus the US dollar after Moody’s downgraded the debt ratings of six European nations and said more may follow.
“You have the policy easing in Japan, which is pushing the yen lower,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc, a currency brokerage. “There are some structural issues in Japan we’re keeping an eye on that the long-time pillars of yen strength are starting to deteriorate.”
The yen fell 2.5 percent to ￥79.55 versus the US dollar, the biggest weekly loss since Nov. 4 last year. It touched ￥79.62, the weakest since Aug. 4 last year. The Japanese currency declined 2.1 percent to ￥104.54 against the euro. The euro fell 0.4 percent to US$1.3140 after touching US$1.2974.
Japan’s central bank increased its asset-purchase fund to ￥30 trillion (US$377 billion), expanding economic stimulus measures for the first time since October last year. The BOJ also said it will target 1 percent inflation “for the time being.”
The US dollar was supported against the yen as the New York-based Conference Board’s gauge of the US outlook for the next three to six months increased, manufacturing in the Philadelphia area expanded by the fastest in four months and initial jobless claims fell to the lowest in four years.
The euro weakened after Moody’s downgraded Italy, Spain and Portugal and said it may strip France, the UK and Austria of their top “Aaa” ratings, citing the debt crisis.
The euro’s weekly loss against the US dollar was limited as Italian Prime Minister Mario Monti, German Chancellor Angela Merkel and Greek Prime Minister Lucas Papademos expressed optimism that an “agreement on Greece” can be reached and the European Central Bank participated in a bond swap for Greek debt.
The yen has tumbled 6.5 percent over the past month and the US dollar dropped 3.2 percent, the worst performers among 10 developed-market currencies according to Bloomberg Correlation-Weighted Indexes. The euro gained 0.6 percent over the period.
Asian currencies gained on Friday, rebounding from a decline earlier in the week, as improved US economic data and optimism Greece would secure a second bailout buoyed demand for emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index rose 0.1 percent in the week.
“The Greek situation was fragile earlier this week and that gave investors selling opportunities,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd in Tokyo. “Ultimately, Europe won’t let Greece default and will probably provide a second bailout. Funds will continue to flow into Asia and regional currencies will remain on a gradual appreciation trend.”
The New Taiwan dollar declined 0.1 percent this week to NT$29.583 per US dollar.
Malaysia’s ringgit jumped 0.8 percent on Friday to 3.0363 per US dollar, erasing the week’s losses. The South Korean won climbed 0.6 percent on Friday to 1,125.50 and Indonesia’s rupiah rose 0.5 percent to 9,046, both trimming the week’s losses to 0.2 percent.