The yen rose against all its major counterparts after traders shrugged off Finance Minister Yoshihiko Noda’s announcement of a $100 billion effort designed to cope with persistent strength in Japan’s currency. The yen erased an earlier drop against the dollar as Noda said the government will release foreign-currency reserves to a state-run export credit agency to facilitate overseas investment. The euro fell from yesterday’s one-week high against the greenback before a report forecast to show German business confidence deteriorated to its lowest level in a year. The New Zealand dollar slid, reducing yesterday’s jump, and the Korean won depreciated as a drop in Asian stocks reduced demand for higher-yielding assets. “This is just another whimper from the Japanese authorities, and to say it’s unimpressive you just have to look at the price action in dollar-yen,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. “I’m not particularly impressed by the announcements and I don’t think the foreign- exchange market is particularly impressed.” The yen traded at 76.64 per dollar as of 6:57 a.m. in London from 76.66 in New York yesterday, after earlier falling to as weak as 76.87. It reached a postwar record of 75.95 on Aug. 19. The euro dropped to 110.42 yen from 110.70 yen. Europe’s 17-nation currency fell to $1.4407 from $1.4442 yesterday, when it touched $1.45, its highest since Aug. 17. Overseas Purchases Japan’s one-year funding program is intended to encourage “the private sector to exchange yen-denominated funds to foreign currencies by supporting exports by small and mid-sized companies, securing energy resources and helping Japanese companies to purchase foreign businesses,” Noda told reporters. The Ministry of Finance will bolster monitoring of the currency market, requiring major financial institutions to disclose trading positions, Noda also said. Today’s announcement is “somewhat underwhelming and unlikely to have much impact” on the exchange rate, said Mitul Kotecha, head of global currency strategy in Hong Kong at Credit Agricole CIB. The move seems “unlikely” to increase demand for overseas purchases, he said. Moody’s Investors Service lowered Japan’s sovereign-credit rating one step to Aa3, with a stable outlook, according to a statement released today. The company cited “weak” prospects for economic growth that will make it difficult for the government to rein in the world’s largest public debt burden. The yen tends to strengthen during periods of financial stress because Japan’s export-reliant economy doesn’t need foreign capital to balance its current account -- the broadest measure of trade. A stronger currency hurts the overseas competitiveness of exporters. ‘The Weakest Link’ The euro fell against the majority of its peers amid concern that growth is slowing in Germany, Europe’s largest economy, and before a separate report forecast to show European industrial orders grew at a slower pace in June. The Ifo institute in Munich will probably say its business climate index, a measure of German business confidence based on a survey of 7,000 executives, declined to 111 in August from 112.9 in July, according to a Bloomberg News survey of economists. New orders in the euro area rose 0.4 percent from May, when they increased 3.6 percent, the European Union’s statistics office in Luxembourg, a separate poll showed. “The growth outlook in Europe is probably where the greatest risks still lie,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “Overall I’m anticipating growth in Europe to be the weakest link going forward,” which will weigh on the euro, he said. Aussie, Kiwi The MSCI Asia Pacific Index of shares fell 1 percent, paring yesterday’s 2.1 percent advance. Australia’s dollar weakened 0.4 percent $1.0482 and New Zealand’s dropped 0.9 percent to 82.86 U.S. cents. South Korea’s won led Asian currencies lower, losing 0.4 percent to 1,082.24 to the dollar. Demand for the greenback was limited on speculation Federal Reserve Chairman Ben S. Bernanke will signal further steps to spur the U.S. economy when he speaks on Aug. 26 in Jackson Hole, Wyoming. Bernanke used the Kansas City Fed’s annual conference for global central bankers last year to hint at a second round of so-called quantitative easing, in which the Fed purchased $600 billion of Treasuries from November 2010 to June. A Commerce Department report on Aug. 26 may show U.S. gross domestic product grew at a 1.1 percent annual pace in the April to June quarter, down from the 1.3 percent rate estimated last month, according to the Bloomberg survey median. “The markets are focused on Bernanke’s speech,” said Junichi Ishikawa, a Tokyo-based market analyst at IG Markets Securities Ltd. “Monetary easing by the Fed will lower U.S. yields, and that will put the dollar under downward pressure broadly.” To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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