The yen and the dollar dropped versus the euro on bets the highest U.S. unemployment rate in 16 years will spur passage of an economic stimulus, reducing demand for the currencies as havens. The Australian dollar rose versus the greenback on bets the Reserve Bank will slow the pace of interest-rate cuts after it said policies “now in place” support the economy. The yen fell against most of its major counterparts, dropping versus the South African and New Zealand currencies. “A lot of money that sat on the sideline is now being put back to work,” said Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon, the world’s largest custodial bank, with more than $23 trillion in assets under administration. “People are starting to move to make risky bets.” The yen lost 1 percent to 117.74 versus the euro at 10:23 a.m. in New York, from 116.63 yesterday. The dollar slid 0.8 percent to $1.2891 per euro from $1.2790. The greenback reached $1.2706 on Feb. 2, the strongest level since Dec. 5. The yen declined 0.5 percent to 91.65 per dollar from 91.23. It touched 92.25 yesterday, the weakest level since Jan. 8, after breaking through a two-week range of about 88 to 90. Japan’s currency was headed for a 2.3 percent weekly decline against the euro and a 1.8 percent drop versus the dollar. The greenback lost 0.5 percent against the euro this week. Yen Versus Aussie The yen slid 2.1 percent to 48.14 against the New Zealand currency and 1.6 percent to 9.43 versus the rand as the Standard & Poor’s 500 Index gained 1.2 percent, encouraging investors to get funds in a country with low borrowing costs and buy higher- yielding assets elsewhere. Japan’s 0.1 percent target lending rate compares with 3.5 percent in New Zealand and 10.5 percent in South Africa. The Australian dollar gained 2.4 percent to 66.80 U.S. cents as the Reserve Bank said in a quarterly statement that the “expansionary monetary and fiscal policies now in place will help to cushion” the economy from “contractionary forces.” President Barack Obama told House Democrats in a speech in Williamsburg, Virginia, yesterday that the U.S. economy faces “catastrophe” without swift enactment of his economic stimulus plan and urged lawmakers to set aside “gamesmanship” and finish the legislation. Senate Majority Leader Harry Reid, facing demands from a bipartisan group of lawmakers for more than $50 billion in cuts, said work on the plan might continue into the weekend. U.S. Job Losses U.S. employers eliminated 598,000 jobs last month, following a reduction of 577,000 in December, the Labor Department said today in Washington. The median forecast of 75 economists surveyed by Bloomberg News was for a reduction of 540,000. The unemployment rate increased to 7.6 percent, the highest level since 1992. The International Monetary Fund reiterated yesterday forecasts for the largest economies, saying U.S. gross domestic product will contract 1.6 percent, Japan’s will shrink 2.6 percent and the euro area will decline 2 percent in 2009. The fund in November foresaw a 0.7 percent U.S. drop and declines of 0.2 percent in Japan and 0.5 percent in the euro zone.

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