The dollar reached a 15-year low against the yen on speculation the Federal Reserve will debase the currency by signaling increased quantitative easing to reduce unemployment. The greenback was within a cent of an eight-month low versus the euro before tomorrow’s release of minutes from the Fed’s Sept. 21 policy meeting as leaders of the world economy failed to narrow currency disagreements. The pound fell to almost a five-month low against the euro on speculation the Bank of England will restart its debt-purchase program. “It’s an argument of U.S. dollar weakness across the board in anticipation of QE2 in November, likely heightened by Friday’s payroll numbers and a lack of agreement from the G- 20,” Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. The dollar traded at 81.97 yen at 10:35 a.m. in New York, compared with 81.93 yen on Oct. 8, after earlier today reaching 81.39 yen, the lowest level since April 1995. The U.S. currency fetched $1.3933 per euro, compared with $1.3939, after declining on Oct. 7 to $1.4029, the weakest level since Jan. 28. The euro was little changed at 114.21 yen, compared with 114.19 yen. Financial markets in Japan and bond markets in the U.S. are closed for public holidays today. Exchange rates dominated the International Monetary Fund’s annual meeting as Treasury Secretary Timothy F. Geithner, People’s Bank of China Governor Zhou Xiaochuan and their counterparts split over whose policies are the biggest threat to the world economy on concern countries are relying on cheap currencies to aid growth. U.S. and China China was accused of undervaluing the yuan, while low U.S. interest rates were blamed by emerging markets for flooding them with capital. Brazil took aim at both the U.S. and China. Finance ministers and central bankers pledged to improve cooperation, yet did little to show how they would alter their ways beyond agreeing to let the IMF study the matter. The focus turns to Group of 20 talks in South Korea in coming weeks. The Dollar Index, which IntercontinentalExchange Inc. uses track the greenback against the currencies of six major trading partners, decreased 0.1 percent to 77.216 after dropping on Oct. 7 to 76.91, the lowest level since Jan. 15. The gauge of the greenback has fallen 4 percent since Sept. 21, when the Fed said after its policy meeting that it’s willing to ease monetary policy further to support the economy. Job Market U.S. employers cut payrolls by 95,000 workers in September after a revised 57,000 decrease in August, Labor Department figures in Washington showed Oct. 8. The median forecast of 87 economists surveyed by Bloomberg News called for a 5,000 drop. The unemployment rate unexpectedly held at 9.6 percent. Fed Chairman Ben S. Bernanke said on Oct. 4 that the central bank’s first round of large-scale asset purchases aided the economy and that further quantitative easing, or QE, is likely to help more. The Dollar Index’s 8.5 percent drop in the third quarter, its biggest three-month drop in eight years, may be setting the stage for a rally. Commodity Futures Trading Commission data show hedge funds and other large speculators are more bearish on the dollar than at any time in history, with bets on a decline exceeding those on a rise by 341,683 contracts as of Oct. 5. The last two times sentiment was close to this level, in early 2008 and late 2009, the dollar rallied. ‘Buy the Fact’ “The market will find it has been selling the rumor and will rush to buy the fact,” when the Fed begins fresh purchases, said Hans-Guenter Redeker, global head of currency research in London at BNP Paribas. “Everybody sits in the same boat and is heavily negative on the dollar. When too many people are sitting in a boat, it’s no longer safe.” The pound declined 0.2 percent to 87.49 pence per euro before a measure of U.K. inflation is released tomorrow. Sterling decreased 0.2 percent to $1.5925. The Bank of England kept up emergency stimulus on Oct. 7 and left its interest rate at a record low 0.5 percent as officials debated whether to join a global push to pump more aid into the world economy. The nine-member Monetary Policy Committee, led by Governor Mervyn King, held the target for bond holdings at 200 billion pounds ($319 billion), as forecast by all but one of 36 economists in a Bloomberg News survey. The yen was little changed versus the dollar after Japanese Finance Minister Yoshihiko Noda said on Oct. 8 that Group of Seven officials understand Japan’s position on the yen’s gains and agreed that excessive foreign-exchange movements are undesirable. The yen remained stronger than 82.88 per dollar, where it traded on Sept. 15, when Japan acknowledged intervening in the foreign-exchange market. “There was no official criticism of Japan’s decision to intervene in the foreign-exchange market by selling yen,” said Gareth Berry, a currency strategist at UBS AG in Singapore. “This increases the chance of a further round of intervention should the yen continue to appreciate.” To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net; To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net

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