The yen rose for a third week against the US dollar, its longest stretch of gains since January, as US economic data signaling the recovery is sputtering boosted demand for currencies less likely to return a loss.
Japan’s currency advanced against all 16 of its most active counterparts, while those of commodity exporters including Canada and Norway were among the worst performers amid speculation the G20 nations will fail to agree this weekend on how to tackle Europe’s debt crisis. Reports next week may show US payrolls shrank and manufacturing growth slowed.
“The yen rally can be described as a safe-haven play,” said Hidetoshi Yanagihara, a currency trader in New York at Mizuho Corporate Bank. “The US economy is not performing well. Growth in the second quarter may have slowed more than people had thought, and that’s what the market is trying to price in.”
The yen gained 1.7 percent to ¥89.23 per US dollar, from ¥90.71 on June 18, and appreciated 1.8 percent to ¥110.41 per euro, from ¥112.40. The euro slipped 0.2 percent to US$1.2369, from US$1.2388 last week. Australia’s higher-yielding dollar slid 1.4 percent to ¥78.02, its first decline in three weeks.
Sterling gained for a third week against the US dollar amid optimism an emergency budget announced Tuesday by British Chancellor of the Exchequer George Osborne would cut the nation’s deficit and enable Britain to keep its top credit rating. The pound rose 1.6 percent to US$1.5063.
The yuan had its biggest weekly gain since December 2008, rising 0.5 percent to 6.7921 per US dollar, after the People’s Bank of China said last Saturday it would end a two-year peg to the dollar.
Asian currencies dropped this week, led by South Korea’s won, as concern Europe’s debt crisis will worsen outweighed the benefits to the region of China’s decision to end the yuan’s two-year peg.
The won declined 1 percent this week to close at 1,215.19 in Seoul, according to data compiled by Bloomberg. The Singapore dollar fell 0.6 percent in the past five days to S$1.3940, the Indian rupee weakened 0.2 percent to 46.2865 and the peso dropped 1.2 percent to 46.445 per dollar.
The New Taiwan dollar pared gains on Friday after the central bank intervened to check appreciation that might hurt exports. Bonds fell the most in eight months after the central bank raised interest rates.
The monetary authority intervened at the last minute of trading, as it has done every day for about two months now, according to a trader familiar with the matter who declined to be identified. The Taiwan dollar earlier rose as much as 0.6 percent after China set the yuan’s rate at a record high, helping boost the purchasing power of the nation’s biggest overseas market. Taiwan’s central bank on Thursday lifted its benchmark interest rate for the first time since 2008.
China “just fixed the yuan’s mid-point at a record high so the Taiwan dollar is stronger,” said Joanna Tan, a regional economist at Forecast Singapore Pte. “That would obviously bring out the yuan proxy trades.”
The NT dollar ended 0.1 percent higher at NT$32.180 against its US counterpart at 4pm on Friday, according to Taipei Forex Inc. The currency was little changed from a week earlier.
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