The euro rose against the majority of its 16 most-traded peers after European Central Bank council member Jens Weidmann said the currency isn’t seriously overvalued.
The shared currency extended gains against the dollar after Weidmann, who heads Germany’s Bundesbank, warned governments against trying to weaken the euro. The yen depreciated to the weakest level in almost three years versus the dollar as Economy Minister Akira Amari was reported by Kyodo News as saying the government should persevere with efforts to boost stocks. Sweden’s krona strengthened amid a forecast for the Riksbank leave the benchmark rate unchanged.
“The move came on the back of the comments from Weidmann,” Nick Bennenbroek, the head currency strategist at Wells Fargo & Co, said in a phone interview. “The ECB and its finance ministers have the primary influence over European currency policy, and the overall weight of comments from policy makers like Weidmann highlight their influence on the exchange rate.”
The shared currency rose 0.3 percent to $1.3406 at 5 p.m. New York time after declining to $1.3325, the lowest since Jan. 24. The yen depreciated 1.8 percent to 94.32 per dollar after reaching 94.46, the weakest since May 5, 2010. Japan’s currency dropped 2.1 percent to 126.45 per euro.
The yen has dropped 20 percent in the past six months, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has fallen 1.9 percent and the euro has added 8 percent, the biggest gain.
The krona gained against all major counterparts before policy makers meet on Feb. 13, when they will leave the benchmark rate unchanged at 1 percent, according to a Bloomberg survey. Sweden’s currency appreciated 0.8 percent to 6.3930 per dollar and gained 0.5 percent to 8.5706 per euro.
The Norwegian krone added 0.6 percent to 5.5032 per dollar after a report showed a measure of inflation unexpectedly accelerated in January. Annual underlying inflation, which adjusts for taxes, fees and energy prices, picked up to 1.2 percent from 1.1 percent in December, Oslo-based Statistics Norway said.
Britain’s pound fell versus all but one major counterpart after an industry report showed U.K. employment confidence declined in January and as traders cut bets the currency would strengthen. Sterling declined 0.9 percent to $1.5659 and 1.3 percent to 85.61 pence per euro.
“Latest indicators don’t signal a serious overvaluation of the euro despite its recent appreciation” and “politicians should hold on to the established division of labor,” Weidmann said in a speech in Freiburg today. “An exchange-rate policy to specifically weaken the euro would lead to higher inflation in the end.”
Futures traders increased their bets that the euro will gain against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 37,952 on Feb. 5, compared with net longs of 27,472 a week earlier. That’s the most since April 2011.
“The euro is not really an overvalued currency at this stage,” Jane Foley, a senior currency strategist at Rabobank International in London, said in a radio interview on “Bloomberg -- The First Word” with Michael McKee. Rabobank forecasts that the euro will appreciate to $1.38 by the end of 2013.
The Group of Seven nations are considering releasing a statement on exchange rates this week to calm concern the world is on the brink of a currency war, three officials from G-7 countries said. The international finance group is looking to release it before a Feb. 15-16 meeting in Moscow of finance ministers and central bankers from the larger Group of 20.
The Japanese government will continue in its efforts to drive the Nikkei 225 Stock Average to 13,000 by the end of the fiscal year on March 31, Amari said two days ago, Kyodo reported. The Nikkei index closed at 11,153.16 last week. Japanese markets were shut today for a public holiday.
“The Japanese will stay committed to their current monetary policies,” said Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut. “Amari is trying to do the whole reflation trade by pumping liquidity into the system. A by-product of that is going to be a push for stocks, and there’s likely to be yen weakness as a result.”