Yen Declines as Sugimoto Says Currency Gains May Hurt Economy

By Anna Rascouet

May 18 (Bloomberg) -- The yen fell against the dollar and the euro after Japanese Vice Finance Minister Kazuyuki Sugimoto said “excessive moves” in currencies may hurt the economy.

The yen dropped the most against the Australian and New Zealand dollars as Sugimoto told reporters in Tokyo today that bolstering the economy is now the government’s “top priority.” The euro dropped versus the dollar after European Central Bank council member Axel Weber warned against “exaggerating” recent signals the economy is stabilizing. India’s rupee climbed the most in two decades on optimism Prime Minister Manmohan Singh’s election victory will help his party implement reforms.

“Sugimoto said that volatility in the exchange was undesirable, which indicates that the yen is probably at too high a level at the moment,” said Emeric Challier, who manages about $92 million in currencies and fixed-income assets at Avenir Finance Investment Managers in Paris.

The yen weakened to 95.85 per dollar as of 10:32 a.m. in London, from 95.21 last week, paring its gain this month to 2.9 percent. It depreciated to 129.11 per euro, from 128.43. The euro slid to $1.3467, from $1.3495.

Japan’s local and foreign-currency debt ratings were brought to the same level, Aa2, by Moody’s Investors Service today, to reflect that the repayment risk for each is equal.

The yen gained 11 percent versus the dollar since the collapse of Lehman Brothers Holdings Inc. last September as investors sought refuge in the currency.

To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.net