Yen Touches Four-Week High on Safety Bid; Ruble Falls to Record

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The yen advanced to a four-week high against the dollar as the tumbling Russian ruble added to deepening concern that the global economy is faltering, boosting haven demand.

Japan’s currency pared gains as oil trimmed its drop to a five-year low. The ruble collapsed to a record even after Russia increased borrowing costs to the most since 1998. The greenback fell as the Federal Reserve begins a two-day policy meeting. Norway’s krone dropped to parity with the Swedish krona for the first time since 2000 as the plunge in oil diminished the nation’s economic outlook. A gauge of emerging-market currencies fell to a 12-year low.

“The market is looking for some stabilization,” said Fabian Eliasson, who works in foreign-exchange sales at Mizuho Financial Group Inc. in New York. “It’s like a triple-whammy” for Russia, with economic sanctions, declining oil prices and a falling ruble.

The yen gained 1.2 percent to 116.41 per dollar at 5 p.m. in New York time after reaching 115.57, the strongest level since Nov. 17. Japan’s currency rose 0.6 percent to 145.64 per euro after advancing 1 percent yesterday. The dollar slid 0.6 percent to $1.2511 per euro.

West Texas Intermediate crude slid as much as 4.1 percent to $53.60 a barrel in New York, the least since May 2009, before trading at $55.51. The United Arab Emirates said the Organization of Petroleum Exporting Countries won’t cut production even if prices fall as low as $40 a barrel.

Russian Rates

Norway’s krone touched a 12-year low against the dollar as Brent crude dropped below $60 a barrel for the first time since July 2009. The krona rose after Sweden’s Riksbank said it’s preparing measures to jolt the largest Nordic economy out of a deflationary spiral as it kept interest rates at zero percent.

The krone gained 0.8 percent to 7.4255 per dollar after depreciating to 7.8745, the weakest since 2002. The krona strengthened 0.2 percent to 7.6276 per dollar after declining to 7.7490, the least since July 2010.

Brazil’s real slumped to a nine-year low as swap rates climbed the most since September on speculation the central bank will raise borrowing costs by as much as a full percentage point next month to control inflation. The real dropped 1.6 percent.

The won strengthened the most since July 2013 after the yen’s gains eased concern South Korea’s exports are losing competitiveness. The currency rose 1.2 percent.

Ruble Tumble

The ruble pushed its plunge this year to 52 percent versus the dollar as Russia’s central bank unexpectedly raised its key interest rate to 17 percent from 10.5 percent. It was the largest increase since 1998, when rates soared past 100 percent and the government defaulted on debt.

The scope of the currency’s retreat indicates policy makers are losing control of the situation as the six-month almost 50 percent tumble in oil saps the country of hard currency needed to sustain an economy that’s sputtering under the weight of international sanctions.

“It’s a panic,” Greg Anderson, Bank of Montreal’s global head of foreign-exchange strategy in New York, said by phone. While the currencies of other oil-producing nations have fallen, “it’s just the magnitude in rubles that’s stunning,” reflecting the illiquidity of the market, he said.

The ruble declined to a record low of 80.10 per dollar after strengthening as much as 9.8 percent following the decision. It helped drag a Bloomberg index of 20 emerging-market currencies to the lowest level dating back to 2002.

Fed Meets

The dollar fell versus the yen as officials of the Federal Open Market Committee met to discuss whether to retain a pledge to keep borrowing costs low for a “considerable time.” Signs of acceleration in the world’s biggest economy have contrasted with sluggish global growth. The key rate has remained at zero to 0.25 percent since 2008.

“It could be some profit-taking that we’re seeing ahead of the FOMC,” Sireen Harajli, a Mizuho Bank Ltd. strategist in New York, said by phone. “Data in the U.S. continue to come in fairly positive -- they continue to point to the ongoing recovery,” which would prompt the Fed to raise rates in the middle of next year.

“Dollar-yen will move higher,” she said.

A gauge of foreign-exchange price swings touched a 15-month high. JPMorgan Chase & Co.’s Global FX Volatility Index rose to 10.04 percent, the highest level since September 2013. It fell to a record 5.28 percent on July 4.

The yen has jumped 2 percent this week, the most on the 10-currency Bloomberg Correlation-Weighted Currency Indexes, as investors sought the safest assets amid concern the drop in oil demand reflects a slowing global economy. The Swiss franc added 1.4 percent, the euro rose 1.2 percent and the dollar gained 0.6 percent. Norway’s krone fell 3.5 percent to pace decliners.

“The Japanese yen and Swiss franc tend to be haven currencies, so they’re getting some support,” Eric Viloria, a strategist at Wells Fargo & Co. in New York, said in a phone interview.

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