By Kristine Aquino and Masaki Kondo - Dec 1, 2011 7:14 AM GMT+0700
The yen was 0.4 percent from a two- week low against the euro as Asian stocks extended a global equity rally, curbing demand for haven assets.
Japan’s currency weakened after six central banks led by the Federal Reserve acted to lower the cost of borrowing dollars for banks, adding to signs policy makers worldwide are acting to ease Europe’s sovereign-debt crisis. The dollar maintained its biggest slide in three weeks versus the 17-nation euro. The Australian and New Zealand dollars traded near two-week highs against the greenback.
“Safe-haven currencies should perform badly while this optimism persists,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “We have more opportunity for policy makers to announce positive measures.”
The yen traded at 104.31 per euro as of 9:05 a.m. in Tokyo from 104.37 in New York yesterday, when it declined to as low as 104.73, the least since Nov. 15. It was at 77.59 per dollar from 77.62. The U.S. currency was little changed $1.3448 per euro from $1.3446 yesterday, when it dropped 1 percent. That was the biggest one-day slide since Nov. 11.
Australia’s dollar fetched $1.0263 from $1.0283 yesterday, when the currency rose to $1.0328, the highest since Nov. 14. New Zealand’s dollar traded at 77.89 U.S. cents from 78.05 yesterday, when it reached 78.23, also the most since Nov. 14.
The MSCI Asia Pacific Index (MXAP) gained 2 percent. The Standard & Poor’s 500 Index rallied 4.3 percent yesterday, the biggest advance (SPX) since Aug. 11.
Lower Premium
The premium banks pay to borrow dollars overnight from central banks will fall by half a percentage point to 50 basis points, the Fed said yesterday in a statement in Washington. The so-called dollar swap lines will be extended by six months to Feb. 1, 2013. The Fed coordinated the move with the European Central Bank and the central banks of Canada, Switzerland, Japan and the U.K.
“This was in response to increased tension in global financial markets,” Bank of Japan Governor Masaaki Shirakawa said at a press conference in Tokyo yesterday. “Coordinated action will give markets a sense of security.”
The six central banks also agreed to create temporary bilateral swap programs so funding can be provided in any of the currencies “should market conditions so warrant.” Those swap lines were also authorized through Feb. 1, 2013.
The ECB holds its next policy meeting on Dec. 8. European heads of government will meet the following day in Brussels.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
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