(Bloomberg News) The dollar fell to a post-World War II low against the yen and dropped versus most currencies on speculation Europe is moving closer to resolving its debt crisis and the Federal Reserve may seek further monetary easing.
The euro advanced for a fourth day against the dollar, in the longest stretch of gains since July, before two European summits within a week. The yen's rise raises the possibility of further intervention by Japanese authorities to stem its gain.
"The dollar is coming under pressure across the board at the moment," said Derek Halpenny, head of European currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. "That's just triggered some stops around the 76.40 to 76.50 level, which has pushed yen a bit stronger."
Japan's currency appreciated 0.8 percent to 76.17 versus the dollar at 9:48 a.m. in New York after touching a record high 75.82. The euro rose 0.8 percent to $1.3885, erasing its weekly drop. The European currency was little changed at 105.78 yen.
Japan's government will add 2 trillion yen ($26 billion) to the 8 trillion yen in foreign-exchange reserves being shifted to the state-run Japan Bank for International Cooperation to aid exporters and spur acquisitions overseas, one document shows.
A further 2 trillion yen will be allocated to encourage investment in domestic plants and to hire workers, according to another document obtained from two government officials who declined to be identified because the plan isn't public.
Fed Governor Daniel Tarullo's call for resuming large-scale purchases of mortgage bonds may boost chances the central bank will start a third round of asset buying aimed at reviving U.S. growth.
Policy makers should move the tool "back up toward the top of the list" because it would help the economy through lower mortgage costs that would boost home purchases and spending by people who refinance their home loans, Tarullo said yesterday in a speech in New York.
The euro got a boost as German officials said there are several possible ways of involving the International Monetary Fund to boost the European Financial Stability Facility's firepower to fight the euro-region debt crisis.
Germany favors using an insurance model to leverage EFSF funds or deepening cooperation with the IMF to expand EFSF resources, a German government official said in Berlin today, speaking on condition of anonymity.