Yen Gains Versus Most Peers as Europe Crisis Dents Global Growth OutlookThe yen rose against the majority of its most-traded peers as concern that Europe’s spreading sovereign-debt crisis will dent global growth spurred investors to buy haven assets. The Japanese currency was poised to gain against all its 16 major counterparts this week before Italy sells as much as 3 billion euros ($4.1 billion) of five-year bonds on Nov. 14, testing investor appetite for the nation’s debt. The dollar strengthened against most peers after U.S Treasury Secretary Timothy F. Geithner said Europe remains the “central challenge” to growth. “There’s still a lot to muddle through,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “The dollar and the yen will still be attracting those safe haven flows.” The yen rose 0.3 percent to 105.40 per euro as of 10:17 a.m. in Tokyo from 105.66 in New York yesterday, set for a 2.4 percent advance this week. The currency was at 77.60 per dollar from 77.65 having gained 0.8 percent since Nov. 4. The euro fetched $1.3584 from $1.3606 yesterday and $1.3792 last week. Italy’s 10-year government bond yield soared to as high as 7.48 percent on Nov. 9. Bond investors charged the nation an interest rate of 6.087 percent yesterday to buy 5 billion euros of one-year bills, the highest in 14 years. Italy’s Senate will vote on debt- reduction measures today in an attempt to shore up investor confidence and pave the way for a new government that may be led by former European Union Competition Commissioner Mario Monti. Asia Impact Europe’s debt woes may have an impact beyond its borders, with concern mounting about the outlook for the global economy. India’s annual industrial production growth rate probably slowed in September and Hong Kong’s economic expansion likely weakened in the third quarter from the year before, reports due today are expected to say, according to economists surveyed by Bloomberg News. “In this sort of an environment the yen is a genuine safe haven because it’s a current account-surplus currency,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, Australia’s second-largest lender. “We’ve had this intense focus on Europe in recent weeks, but today is a day to take the pulse of Asia.” Rate Decisions The Bank of Korea kept its benchmark interest rate unchanged at 3.25 percent today in a decision predicted by all 17 economists surveyed by Bloomberg. Bank Negara Malaysia will probably also keep its benchmark overnight policy rate at 3 percent today, according to economists in a separate survey, to protect growth as Europe’s debt crisis imperils demand for Asian exports. Indonesia’s central bank unexpectedly cut rates by half a percentage point to a record low of 6 percent yesterday to shield the economy from a faltering global recovery. The world’s fourth-most populous nation joined countries from Brazil to Australia in lowering borrowing costs to boost spending at home. Geithner, who is in Honolulu attending the 21-nation Asia- Pacific Economic Cooperation conference, said in prepared remarks that the APEC countries are all directly affected by the euro-zone crisis and he encouraged them “to take steps to strengthen growth in the face of these pressures from Europe.” The dollar tends to gain during periods of financial stress because of its status as the world’s reserve currency. The yen strengthens because Japan’s export-reliant economy doesn’t need foreign capital to balance current accounts -- the broadest measure of trade. Stalling Growth The 17-nation euro headed for its second weekly loss versus the dollar before reports next week that may show the region’s economy is struggling to recover amid the debt crisis. Euro-zone industrial production probably declined 1.5 percent in September, according to the median estimate of six economists surveyed by Bloomberg before the figures are released on Nov. 14. A report the following day may show the region’s gross domestic product grew 0.2 percent in the third quarter, the same pace as the previous period, according to a separate survey. That’s the slowest expansion since June 2009. “The macro backdrop in Europe is still very weak and could get worse,” said IG Markets’ Weston. “I wouldn’t rule out a move in the medium term in the euro to around $1.30 or below.” The European Commission yesterday cut the region’s growth forecast for next year to 0.5 percent from 1.8 percent. It predicts the economy may expand 1.5 percent this year, down from a previous projection of 1.6 percent.

The yen rose against the majority of its most-traded peers as concern that Europe’s spreading sovereign-debt crisis will dent global growth spurred investors to buy haven assets.

The Japanese currency was poised to gain against all its 16 major counterparts this week before Italy sells as much as 3 billion euros ($4.1 billion) of five-year bonds on Nov. 14, testing investor appetite for the nation’s debt. The dollar strengthened against most peers after U.S Treasury Secretary Timothy F. Geithner said Europe remains the “central challenge” to growth.

“There’s still a lot to muddle through,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “The dollar and the yen will still be attracting those safe haven flows.”

The yen rose 0.3 percent to 105.40 per euro as of 10:17 a.m. in Tokyo from 105.66 in New York yesterday, set for a 2.4 percent advance this week. The currency was at 77.60 per dollar from 77.65 having gained 0.8 percent since Nov. 4. The euro fetched $1.3584 from $1.3606 yesterday and $1.3792 last week.

Italy’s 10-year government bond yield soared to as high as 7.48 percent on Nov. 9. Bond investors charged the nation an interest rate of 6.087 percent yesterday to buy 5 billion euros of one-year bills, the highest in 14 years.

Italy’s Senate will vote on debt- reduction measures today in an attempt to shore up investor confidence and pave the way for a new government that may be led by former European Union Competition Commissioner Mario Monti.
Asia Impact

Europe’s debt woes may have an impact beyond its borders, with concern mounting about the outlook for the global economy. India’s annual industrial production growth rate probably slowed in September and Hong Kong’s economic expansion likely weakened in the third quarter from the year before, reports due today are expected to say, according to economists surveyed by Bloomberg News.

“In this sort of an environment the yen is a genuine safe haven because it’s a current account-surplus currency,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, Australia’s second-largest lender. “We’ve had this intense focus on Europe in recent weeks, but today is a day to take the pulse of Asia.”
Rate Decisions

The Bank of Korea kept its benchmark interest rate unchanged at 3.25 percent today in a decision predicted by all 17 economists surveyed by Bloomberg. Bank Negara Malaysia will probably also keep its benchmark overnight policy rate at 3 percent today, according to economists in a separate survey, to protect growth as Europe’s debt crisis imperils demand for Asian exports.

Indonesia’s central bank unexpectedly cut rates by half a percentage point to a record low of 6 percent yesterday to shield the economy from a faltering global recovery. The world’s fourth-most populous nation joined countries from Brazil to Australia in lowering borrowing costs to boost spending at home.

Geithner, who is in Honolulu attending the 21-nation Asia- Pacific Economic Cooperation conference, said in prepared remarks that the APEC countries are all directly affected by the euro-zone crisis and he encouraged them “to take steps to strengthen growth in the face of these pressures from Europe.”

The dollar tends to gain during periods of financial stress because of its status as the world’s reserve currency. The yen strengthens because Japan’s export-reliant economy doesn’t need foreign capital to balance current accounts -- the broadest measure of trade.
Stalling Growth

The 17-nation euro headed for its second weekly loss versus the dollar before reports next week that may show the region’s economy is struggling to recover amid the debt crisis.

Euro-zone industrial production probably declined 1.5 percent in September, according to the median estimate of six economists surveyed by Bloomberg before the figures are released on Nov. 14. A report the following day may show the region’s gross domestic product grew 0.2 percent in the third quarter, the same pace as the previous period, according to a separate survey. That’s the slowest expansion since June 2009.

“The macro backdrop in Europe is still very weak and could get worse,” said IG Markets’ Weston. “I wouldn’t rule out a move in the medium term in the euro to around $1.30 or below.”

The European Commission yesterday cut the region’s growth forecast for next year to 0.5 percent from 1.8 percent. It predicts the economy may expand 1.5 percent this year, down from a previous projection of 1.6 percent.