By Bo Nielsen and Stanley White Dec. 11 (Bloomberg) -- The dollar fell against the yen as a bill to prevent the collapse of U.S. automakers met with opposition in the Senate amid concern the global economic slowdown is broadening. The U.S. currency also weakened to a six-week low versus the euro after a report yesterday showed the U.S. government’s budget deficit for the fiscal year that started in October rose to a record $401.6 billion. The Swiss franc fell against the euro and the yen after the central bank reduced its interest rate to a four-year low 0.5 percent today. “Risk aversion is out there even as markets are recovering,” said Geoffrey Yu, a currency strategist in London at UBS AG, the world’s second-largest foreign-currency trader. “The problems with the U.S. automakers make a case for risk aversion. We’re getting close to year-end and liquidity in the markets is thin so we’ll see moves being exaggerated.” The dollar weakened to 92.24 yen as of 11:09 a.m. in London from 92.76 yesterday in New York. It fell 0.9 percent to $1.3144 after declining to $1.3158, the lowest level since Oct. 30. The euro rose to 121.02 yen from 120.78 yen. The Swiss franc traded at 1.5649 per euro from 1.5611 and was down 0.3 percent to 77.19 yen. The Swiss National Bank, led by Jean-Pierre Roth, reduced the three-month Libor target by 50 basis points to 0.5 percent today, as predicted by 13 of the 18 economists surveyed by Bloomberg News. Yen Gains The yen gained this year against all 178 currencies tracked by Bloomberg as the global recession encouraged Japanese investors to bring funds back home. Japan’s currency jumped 21 percent versus the dollar, 34 percent against the euro and 66 percent against Brazil’s real as the financial crisis prompted investors to reverse so-called carry trades, in which they purchase higher-yielding assets funded in countries where borrowing costs are lower. Japan’s benchmark rate of 0.3 percent is the lowest among major economies. The dollar gained 11 percent against the euro this year as the credit-market seizure and $980 billion of losses on mortgage- related securities worldwide led investors to repatriate overseas investments to the U.S. and seek shelter in government debt. The dollar fell after Republican Senator George Voinovich said yesterday that legislation to provide $14 billion in federal loans to General Motors Corp. and Chrysler LLC may not have enough votes from his party. Automaker Bailout “No one is sure how the automaker rescue package will turn out, and that’s making some people nervous,” said Saburo Matsumoto, senior manager of foreign-exchange sales at Sumitomo Trust & Banking Co. “The global economy clearly has problems. This will pressure the dollar to go lower against the yen.” The dollar may fall to 91 yen today, Tokyo-based Matsumoto said. The U.S. budget deficit in November swelled from $98.2 billion in November from a year earlier, as the government used taxpayer money to shore up the financial system by buying stakes in banks, the Treasury Department reported yesterday. Government revenue fell 4.2 percent, while spending soared 24 percent. The dollar may extend its decline as the U.S. government increases its budget deficit by spending “trillions of dollars” to revive the economy, said Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California. Dollar Index “There’s some risk” for the dollar to weaken, Gross said in an interview on Bloomberg Television yesterday. “It is fair to say other economies are doing much the same thing. The dollar doesn’t have to go south if all the economies reflate at the same time.” The ICE’s Dollar Index, which tracks the greenback against the euro, the yen, the pound, the Canadian dollar, the Swiss franc and Sweden’s krona, fell 0.9 percent to 84.757. It touched 88.463 on Nov. 21, the highest level since April 2006. South Korea’s won rose 2.6 percent to 1,358.40 per dollar, after touching 1,330.35, the strongest level in a month. The Bank of Korea lowered its benchmark rate a larger-than-forecast 1 percentage point to 3 percent to prevent the economy from slipping into a recession. The won, Asia’s worst performer, declined 32 percent against the dollar this year. Japan will expand its currency-swap agreement with South Korea to help its neighbor obtain foreign exchange, Naoyuki Shinohara, vice finance minister for international affairs, told reporters in Tokyo today. Policy makers are discussing the amount of the swap increase, Japan’s top currency official said. To contact the reporters on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net.

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