“The yen approached the weakest level since May 2010 against the dollar after Bank of England Governor Mervyn King said currencies should be allowed to fluctuate based on monetary-stimulus measures.
The yen fell versus all except one of its 16 major counterparts as King’s comments allayed concern the Group of 20 meeting this week would criticize Japan for introducing stimulus measures that tend to weaken its currency. The pound slumped after the Bank of England said risks to the U.K.’s economic recovery were weighted to the downside. Sweden’s krona rallied after the central bank kept interest rates unchanged. The euro rose after a report showed industrial production increased.
“King is pointing out that if there is an impact on foreign-exchange rates from policy moves designed to support growth, then so be it,” said Jane Foley, a senior currency strategist at Rabobank International in London. “The yen is weakening today. King, it seems, did not want to point the finger at Japan.”
The yen depreciated 0.2 percent to 93.70 per dollar as of 7:05 a.m. in New York after sliding to 94.46 on Feb. 11, the weakest level since May 5, 2010. Japan’s currency declined 0.5 percent to 126.43 per euro after reaching 127.71 on Feb. 6, the least since April 2010. The euro rose 0.3 percent to $1.3490.
Japan’s currency has tumbled 18 percent in the past three months, the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar declined 1.7 percent and the euro rose 5.1 percent.
“When countries take measures to use monetary stimulus to support growth in their economy, then there will be exchange- rate consequences and they should be allowed to flow through,” King said at a press conference in London. “It’s very important to allow exchange rates to move.”
