Dollar Falls Below 82 Yen for First Time Since 1995 on Job Cuts

The dollar dropped below 82 yen for the first time in 15 years as the U.S. payrolls report showed employers cut more jobs last month than economists forecast, heightening concern the economic recovery is stalling.

The greenback was headed for a fourth weekly decline against the euro in the longest stretch of losses since December 2008 as investors speculated the Federal Reserve will debase the currency by stepping up purchases of government debt. The yen and Swiss franc rose today versus most major counterparts as investors sought easily traded alternatives to the dollar.

“It is basically increasing the odds for quantitative easing, which means more creation of dollars, and the dollar falls across the board,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York in an interview on Bloomberg Television’s “InBusiness” with Margaret Brennan. “It’s a pretty good bet dollar-yen will continue to go lower.”

The dollar decreased 0.3 percent to 82.15 yen at 4:27 p.m. in New York, from 82.41 yesterday. It touched 81.73, the lowest level since April 1995. The U.S. currency traded at $1.3930 per euro, compared with $1.3926. The euro slid 0.3 percent to 114.45 yen, from 114.75.

Stocks rallied on the prospects for Fed policy easing, pushing the Dow Jones Industrial Average above 11,000 for the first time since May. Gold rose after touching a record $1,366 an ounce yesterday. Twelve of 18 traders, investors and analysts in a Bloomberg News survey said the metal will gain next week on demand for an alternative to the dollar. Yields on two- and five-year Treasury notes fell to record lows.

Dollar Index

The Dollar Index, used by IntercontinentalExchange Inc. to track the greenback against the currencies of six major U.S. trading partners including the euro and yen, slid 0.2 percent to 77.26, from 77.39 yesterday, when it touched 76.91, the lowest level since Jan. 15.

The yen gained 0.9 percent to 13.64 South Korean won and appreciated 0.3 percent to 12.34 versus the Swedish krona. The franc gained 0.3 percent to 96.38 centimes versus the dollar after appreciating yesterday to a record 95.55.

U.S. employers cut staffing by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. The median forecast of 87 economists in a Bloomberg News survey was for a drop of 5,000. The unemployment rate unexpectedly held at 9.6 percent.

‘Dollar Pressured’

“People are taking the numbers and continuing to price in quantitative easing,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “You’re going to see the dollar pressured.”

Fed Chairman Ben S. Bernanke said on Oct. 4 that the central bank’s first round of large-scale asset purchases aided the economy and that further quantitative easing is likely to help more. The Federal Open Market Committee is next scheduled to meet Nov. 2-3.

The central bank completed in March a program in which it created new money to purchase $1.25 trillion of agency mortgage- backed securities and about $175 billion of agency debt, debasing the dollar. The Fed was the biggest buyer of Treasuries when it purchased $300 billion of U.S. debt in 2009.

The Bank of Japan adopted this week a 5 trillion yen ($60 billion) program aimed at lowering long-term borrowing costs and the premiums on corporate debt. It also cut its benchmark overnight interest rate for the first time since 2008, dropping it to a range of zero to 0.1 percent.

“It becomes a question of who prints the most, and as you see the yen strengthened today,” said Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., in a radio interview on “Bloomberg Surveillance” with Tom Keene. “There is the assumption that the U.S. will print more than Japan on a relative basis.”

Weekly Drop

The dollar fell 1.3 percent versus the yen this week in a third decline, while the greenback’s fourth weekly loss pushed the euro down 1 percent. The greenback slid for five straight weeks through Dec. 26, 2008, after the Fed cut the target lending rate to a range of zero to 0.25 percent.

Finance Minister Yoshihiko Noda of Japan told reporters today in Tokyo before departing for a Group of Seven meeting in Washington that the nation doesn’t intend to return to the long-term, large-scale intervention campaigns of the past.

Japan acknowledged intervening in the currency market on Sept. 15, when the yen strengthened to 82.88 per dollar. Chief Cabinet Secretary Yoshito Sengoku said then that the finance ministry “seems to think” 82 is the line of defense to protect the nation’s export-dependent economy.

Flaherty’s View

Canadian Finance Minister Jim Flaherty, who chairs the G-7 gathering, said this week that “there are concerns about interventions in currency markets” and that he’s “sure” the issue will be discussed.

Swiss Finance Minister Hans-Rudolf Merz said the “currency war” issue “hasn’t played a role in today’s discussions” during an International Monetary Fund meeting in the U.S. capital.

The Canadian dollar erased losses against the greenback as the U.S. employment numbers outweighed a weaker-than-expected Canadian jobs report also released today.

The loonie appreciated 0.6 percent to C$1.0128 per U.S. dollar, extending its sixth straight weekly gain to 0.9 percent. The Canadian currency has gained more than 5 percent since Aug. 31, when it touched an eight-week low.