The yen fell against the dollar, heading for its biggest quarterly loss since 2001, after Japan’s Prime Minister Taro Aso said the world’s second-largest economy is still in a state of crisis. Japan’s currency extended its first quarterly loss against the euro since June after a report showed unemployment jumped to a three-year high. The yen and dollar fell against major counterparts today as European stocks rallied, reducing demand for the currencies’ safety. “We’re seeing a tentative return of risk appetite,” said Samarjit Shankar, a strategist in Boston at Bank of New York Mellon, which administers more than $20 trillion. “We’re also seeing Japanese investors themselves venturing outside the country because there’s not much yield or promise of return in Japanese assets.” The yen dropped 1.3 percent to 98.54 per dollar at 8:42 a.m. in New York, from 97.26 yesterday. Japan’s currency lost 2.2 percent to 131.13 per euro from 128.36 yesterday, when it touched 126.42, the strongest level since March 16. The dollar weakened 0.9 percent to $1.3315 per euro from $1.3199. Japan’s currency tumbled 8 percent against the dollar this quarter, the worst performance since the last three months of 2001, and weakened 3.5 percent versus the euro. Confidence among Japan’s large manufacturers dropped to minus 55 in the first quarter from minus 24 in the previous quarer, according to a Bloomberg News survey of economists before tomorrow’s Tankan report from the Bank of Japan. That would be the lowest since 1975. The jobless rate climbed to 4.4 percent in February, from 4.1 percent the previous month, the statistics bureau said today in Tokyo. Australian Dollar The Australian and New Zealand dollars rose against the yen on speculation the rally in stocks encouraged investors to seek higher returns in those countries. Japan’s currency fell 2.8 percent against the Australian dollar to 68.19 yen and declined 2.6 percent versus New Zealand’s dollar to 56.24. “Asia set about on a huge buying spree of risk proxies, with the yen and the dollar stark underperformers,” Sue Trinh, senior currency strategist in Sydney at RBC Capital Markets, wrote in a note to clients today. Japan’s benchmark interest rate is 0.1 percent, compared with 3.25 percent in Australia, 3 percent in New Zealand and 1.5 percent in Europe. The pound rose 0.3 percent to $1.4311 after a report showed confidence among U.K. consumers increased to the highest level since May. The British currency headed for a quarterly gain of 2.7 percent, its first advance since June. ‘We Like Sterling’ “We like sterling now that the pace of deterioration in the U.K. may be starting to stabilize,” said David Woo, the head of currency strategy in London at Barclays Capital. “There are compelling reasons to believe sterling may be starting to find the bottom against the euro.” The euro rose for the first time in three days against the yen on speculation assets denominated in Europe’s currency will maintain their advantage over those in Japan even if the ECB cuts borrowing costs at its April 2 meeting. ECB President Jean-Claude Trichet and his colleagues will lower the main refinancing rate by a half-percentage point to 1 percent, according to a Bloomberg survey. ECB council member Axel Weber has said the central bank shouldn’t cut borrowing costs below that level. “The ECB will continue to be reluctant to cut rates or to move to quantitative easing,” said Satoru Ogasawara, a foreign- exchange analyst and economist in Tokyo at Credit Suisse Group AG, the second-largest Swiss bank. “The monetary-policy differentials make the euro better supported.” ECB Outlook The ECB should continue to reduce rates and introduce quantitative easing to fight the euro area’s worst recession since World War II, the Organization for Economic Cooperation and Development said today in a report. Some analysts said losses in the dollar may be tempered on speculation the U.S. government’s efforts to stem the nation’s financial crisis will help the world’s biggest economy recover. The government and the Federal Reserve committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to ease the recession. The Dollar Index headed for a fourth quarterly gain, the longest stretch since 2005, after President Barack Obama yesterday gave General Motors Corp. 60 days to develop a new strategy and provided Chrysler LLC with 30 days to complete a partnership with Italy’s Fiat SpA. Obama also told the companies to “fundamentally restructure” or lose government aid. “The U.S. is acting decisively and quickly to resolve the carmakers’ problems, which would be good for the overall economy,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second-largest lender. “This is positive for the dollar.” The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell 0.7 percent to 85.26, It reached 86.13 yesterday, the highest level since March 18.

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