Yen, Franc Drop Versus Major Counterparts as Stocks, Commodities Advance

The yen and the Swiss franc slid versus their major counterparts, with Japan’s currency dropping against the euro for the first time in six days, as gains in stocks and commodities damped demand for safer assets.

The euro rose versus the dollar after a spokesman for German Chancellor Angela Merkel said restructuring of Greece’s debt isn’t being considered. Inflation in Switzerland slowed more than forecast, dimming prospects for interest-rate boosts. Raw materials rallied from a slump last week, pushing up the Canadian and Australian dollars.

“Global equity markets have gotten a big boost today,” said Brian Taylor, chief currency trader a Manufacturers & Traders Trust Co. in Buffalo, New York. “Commodity currencies will be a factor as the global economy picks up; you’re going to see places like Canada, Australia and New Zealand do well.”

The yen depreciated 1 percent to 116.54 per euro, snapping a five-day gain, at 5 p.m. in New York. The Japanese currency weakened 0.6 percent to 80.88 per dollar. Europe’s shared currency rose 0.3 percent to $1.4409 after earlier losing as much as 0.7 percent. It dropped to $1.4255 yesterday, the weakest level since April 19.

The Swiss franc fell all of its 16 most-traded counterparts, dropping 0.9 percent to 87.98 centimes per dollar and tumbling 1.2 percent to 1.2678 per euro.

The MSCI World Index climbed 0.9 percent, and the Standard & Poor’s 500 Index gained 0.8 percent. The Thomson Reuters/Jefferies CRB Index of raw materials climbed 1.3 percent after losing 9 percent last week in the biggest drop since December 2008.

China Meetings

China’s yuan reference rate was set at the strongest since 2005 as officials met for a second day in Washington. The rate was 6.495 per dollar.

China assured the U.S. it will continue moving toward a more flexible yuan exchange rate, a Treasury official said. Even so, no specific target or number for the currency’s value will be part of formal agreements between the two nations, the official said.

In a statement released today following the meetings, the annual Strategic and Economic Dialogue with U.S. officials, China said it faces challenges from rising consumer prices and will maintain a “prudent” monetary policy.

The franc was the best-performing major currency in the past 12 months, according to the Bloomberg Correlation-Weighted Indexes, a gauge of 10 developed-nation currencies, gaining 13 percent. That performance was followed by a 7.6 percent rally in the Swedish krona.

Swiss National Bank

Switzerland’s currency fell today as the nation’s consumer prices rose 0.3 percent in April from a year earlier, the Federal Statistics Office in Neuchatel said. That gives the Swiss National Bank room to keep interest rates on hold next month. A Bloomberg News survey forecast a 0.6 percent gain.

“The CPI numbers were softer than expected, making the SNB June meeting somewhat of a close call on whether they raise rates or not,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “We’ve had some hawkish comments from the Swiss National Bank, and it seems to be less of a concern after the numbers today.”

The SNB kept its benchmark interest rate unchanged at 0.25 percent at its meeting on March 17. It decides borrowing costs again in June.

The Canadian dollar advanced 0.5 percent to 95.69 cents per greenback, from 96.18 cents yesterday. Australia’s dollar gained 0.3 percent to $1.0840, from $1.0807.

Norwegian Krone

Norway’s krone strengthened 0.6 percent against the euro to 7.8126 and gained 0.9 percent to 5.4220 per dollar. Norwegian underlying inflation, which excludes energy costs and taxes, quickened to a 1.3 percent annual pace in April from 0.8 percent the previous month, data showed today. Futures for crude oil, the nation’s largest export, rose 1.3 percent to $117.39 a barrel in London after falling earlier as much as 2 percent.

A restructuring of Greece’s debt “is not being discussed,” Steffen Seibert, Merkel’s spokesman, said in an e- mailed statement. Greece’s exit from the region that uses the euro “has never been and isn’t being debated,” Seibert said.

European and International Monetary Fund officials are examining Greece’s progress, and “on the basis of the report of the review mission, we will in a few weeks time have a chance to make an informed decision,” European Union Economic and Monetary Commissioner Olli Rehn told reporters in Strasbourg, France today.

New Zealand’s dollar may be as much as 20 percent overvalued relative to estimates of the equilibrium exchange rate, the IMF said. Part of the overvaluation reflects the large positive interest-rate differential, which may dissipate with eventual tightening by major central banks, the Washington-based group said as part of an annual review of the country’s economy.

The currency, nicknamed the kiwi, depreciated as much as 0.8 percent to 78.90 U.S. cents before trading little changed at 79.54 cents.

To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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