April 12 (Bloomberg) -- The yen and Swiss franc rose against most of their major counterparts after Japan raised the severity rating for the nuclear crisis that began last month and more earthquakes shook buildings in Tokyo, reducing demand for higher-yielding assets. The euro rose to $1.45 for the first time since January 2010 as the International Monetary Fund and European Commission considered an 80 billion-euro ($116 billion) aid program for Portugal. The yen and franc gained as Japan said the accident at the Fukushima Dai-Ichi power plant may release more radiation than the 1986 Chernobyl disaster. “Japan just keeps having problems, not only with additional tremors but also the nuclear problem, which is getting worse and worse,” said Greg Michalowski, chief currency analyst in New York at FXDD, an online currency broker. “That has the market on edge and has helped the yen.” The yen gained 0.7 percent to 84.01 versus the dollar at 9:06 a.m. in New York, from 84.60 yesterday, after reaching 83.47, the strongest level since April 1. The euro increased 0.5 percent to $1.4513, from $1.4436, after touching $1.4517, the highest level since January 2010. The Swiss franc appreciated 1.3 percent to 89.55 centimes versus the dollar, from 90.67. Canada’s dollar was little changed at 95.71 cents versus the U.S. dollar after the Bank of Canada held its target lending rate at 1 percent. The currency touched 95.27 on April 8, the strongest level since November 2007. Weaker Pound The pound slumped to its weakest against the euro in almost six months as the U.K.’s inflation unexpectedly slowed in March, discouraging the Bank of England from raising interest rates. Consumer prices rose 4 percent from a year earlier, down from the 4.4 percent pace in February, which was also the median forecast in a Bloomberg News survey of economists. Sterling lost 0.8 percent to 88.99 pence per euro after reaching 89.02, the weakest level since Oct. 25. The pound lost 0.4 percent to $1.6289. The yen and franc gained as Japan’s Nuclear and Industrial Safety Agency raised the level of the Fukushima crisis to 7, the highest in the standard global scale. An earthquake striking Chiba, east of Tokyo, and shaking buildings in the capital had a magnitude of 6.2 according to the U.S. Geological Survey. Another earthquake with a magnitude of 6.3 struck Fukushima prefecture in the afternoon, according to the Japan Meteorological Agency. Economic and Fiscal Policy Minister Kaoru Yosano said earthquake damage may hurt the economy more than previously estimated. The government last month said damages could reach as much as 25 trillion yen. Outlook for Yen “Yen-buying pressure may intensify against a backdrop of Japanese investors’ risk reduction and a worldwide equity downward correction,” said Junya Tanase, chief currency strategist at JPMorgan Chase & Co. in Tokyo. “We expect dollar- yen to decline towards 80 in coming several weeks.” The IMF lowered its 2011 forecast for Japanese growth to 1.4 percent from 1.6 percent in its World Economic Outlook report yesterday, citing effects from the disaster. Japan’s currency soared to a post-World War II record of 76.25 versus the dollar on March 17, six days after a magnitude- 9 quake and tsunami hit northeastern Japan. The yen had gained on bets insurance companies would repatriate overseas assets to pay for reconstruction. Group of Seven nations jointly intervened on March 18 by selling yen to stem its advance. Aid for Portugal IMF, European Commission and European Central Bank officials will be in Lisbon today as they start preparing an aid program for Portugal, the third euro nation to request a bailout in a year. The European Union aims to reach an agreement on the aid package on May 16, about three weeks before Portugal’s early election on June 5. ECB policy makers led by President Jean-Claude Trichet raised the main refinancing rate last week to 1.25 percent from a record low 1 percent, where it had been since 2009, and left the door open for further rate increases. The U.S. trade deficit narrowed in February from a seven-month high as demand for imports decreased for the first time in four months. The gap shrank to $45.8 billion from $47 billion in January, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News projected a decline to $44 billion from a previously reported $46.3 billion. --With assistance from Candice Zachariahs in Sydney and Masaki Kondo in Singapore. Editors: Dennis Fitzgerald To contact the reporters on this story: Liz Capo McCormick in New York at emccormick7@bloomberg.net; Garth Theunissen in London gtheunissen@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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