The dollar fell to a record versus the Swiss franc as President Barack Obama said the burgeoning U.S. debt threatens to do “serious” damage to the economy. The U.S. currency slid below 78 yen for the first time since March and fell to a three-week low against the euro as Obama urged Congress to address future deficits while lawmakers struggle to reach an accord to raise the nation’s $14.3 trillion debt ceiling by an Aug. 2 deadline. Gains in the yen were limited on speculation Japanese officials will intervene. South Korea’s won rose as the central bank said economic growth will accelerate and on expectations exporters will convert earnings. “We are seeing a strong negative sentiment on the dollar across the board,” said Tetsuya Inoue, chief researcher for financial markets for Tokyo-based Nomura Research Institute Ltd. “They seem to be focusing on reaching some kind of accord before the deadline, but they are unlikely to go beyond that.” The dollar dropped to 80.13 Swiss centimes as of 6:46 a.m. in London from 80.61 in New York yesterday. It earlier reached an all-time low of 80.06 centimes. The yen was at 78.09 per dollar from 78.29, after touching 77.90, the strongest since March 17. Japan’s currency weakened to 113.18 per euro from 112.55. The greenback fell to $1.4492 against the euro from $1.4377, after reaching 1.4501, the weakest since July 5. Obama called on lawmakers to put politics aside to reach a deal on a “balanced” approach and blamed the current stalemate on a group of Republicans in the House who are insisting on budget cuts and no tax increases. ‘Serious Damage’ “If we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy,” Obama said in a prime-time address from the White House. House Speaker John Boehner and Senate Majority Leader Harry Reid unveiled their own proposals yesterday. Obama endorsed Reid’s plan and said that Boehner’s measure is simply “kicking the can further down the road.” Both sides will have to compromise further, Obama said. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, fell to 73.624 from 74.102. It earlier reached 73.610, the lowest since June 8. “Just like a meltdown at a nuclear power plant, a U.S. default will trigger an incident that’s too scary to imagine, so people can’t buy the dollar when there’s such a risk, however small,” said Daisaku Ueno, Tokyo-based president of Gaitame.com Research Institute Ltd., a unit of Japan’s largest online currency broker. “Currencies such as the Swiss franc or Japanese yen continue to be preferred.” Moody’s Investors Service yesterday downgraded Greece to its second-lowest rating. The European Union support package for Greece allows an “orderly default” and buys time, Moody’s said. ‘Bearish’ on Yen Japanese Finance Minister Yoshihiko Noda said currency moves have been one-sided and he will continue to watch the yen closely. Bank of Japan Governor Masaaki Shirakawa said yesterday that the currency’s strength could hurt the economy and the central bank is ready to take appropriate action as needed. “I’m bearish on the yen,” said Koji Fukaya, chief currency strategist at Credit Suisse Group AG in Tokyo. “To prevent the yen from strengthening beyond a record and into the 75 range, intervention should start much sooner. An intervention will be no surprise with the yen anywhere beyond 80.” There were no signs that Japan’s central bank intervened in currency markets today to weaken the yen, according to traders. Japan’s currency dropped from 78.10 per dollar to as low as 78.70 within a minute at about 11:06 a.m. in Tokyo. Automatic Orders “Substantial dollar buying seems to have triggered” automatic orders, pushing the dollar up briefly against the yen, said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. Group of Seven nations jointly sold the yen on March 18 after it reached a postwar record of 76.25 to the dollar the previous day, saying in a statement they wanted to reduce “excess volatility and disorderly movements.” Japan’s Finance Ministry sold 692.5 billion yen ($8.9 billion) that month in its first currency intervention since September. South Korea’s growth will pick up in the second half of the year and policy makers will tackle inflation, Bank of Korea Deputy Governor Kim Jae Chun said in an interview yesterday. “The BOK’s comments on the economy are supportive of the won, which will likely continue its strong momentum into the second half,” said Bae Jin Chul, a Seoul-based dealer at the state-run Industrial Bank of Korea. “The market is receiving a steady flow of month-end dollar sales from exporters as well.” The won appreciated 0.4 percent to 1,051.80 per dollar. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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