The euro strengthened, extending its biggest weekly gain versus the dollar since January, as Group of 20 finance ministers start a two-day meeting today to discuss plans to tackle Europe’s debt crisis. The 17-nation currency approached a five-week high versus the yen as G-20 and International Monetary officials said the ministers meeting in Paris will consider boosting the IMF’s lending resources. The yen weakened against all its major counterparts as stock gains damped demand for safer investments. Singapore’s dollar rose after the central bank eased monetary policy less than some analysts forecast. “There’s an element of optimism in the markets,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “Markets are very mindful of anything we may, or may not get out of the G-20 meeting. Risk appetite looks a little stronger. These factors are helping the euro hold up.” The euro rose 0.2 percent to $1.3802 at 10:54 a.m. London time, poised for a 3.1 percent gain this week, the most since the period ended Jan. 14. The shared currency appreciated 0.4 percent to 106.34 yen, set for a weekly advance of 3.6 percent. The yen weakened 0.2 percent to 77.05 per dollar. The euro has appreciated 1.1 percent in the past month, according to Bloomberg Correlation-Weighted Currency Indexes. It strengthened this week as German Chancellor Angela Merkel and French President Nicolas Sarkozy put bank recapitalization at the top of the priority list in an Oct. 9 declaration. Stronger IMF Policy makers are discussing an expansion of the IMF’s firepower as part of a global G-20 agreement next month in Cannes, France, according to three officials, who declined to be named because the discussions are not public. Talks are in preliminary stages as potential contributors wait to see what measures Europeans take to end the debt turmoil at an Oct. 23 summit, they said. “The market has been concerned about the fiscal position of European governments, so using the IMF to take emerging- market money and assist the euro zone would be a big boost to confidence,” said Grant Turley, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “Any announcement on the issue would be a euro positive.” Gains in the euro were tempered after Standard & Poor’s cut Spain’s credit rating late yesterday. S&P downgraded Spain to AA- from AA with a negative outlook. The nation’s rating has been lowered by S&P three times since 2009, when the country lost its AAA status. Yen Weakens The yen declined the most against the Singapore dollar and Mexican peso as the Stoxx Europe 600 Index and futures on the Standard & Poor’s 500 Index expiring in December both advanced 0.9 percent. Singapore’s dollar strengthened after the central bank said it will reduce the currency trading band’s slope to slow the pace of appreciation. Seven of 22 analysts in a Bloomberg News survey forecast an easing of monetary conditions. “We had actually expected further easing by the central bank,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur, who predicted a re- centering of the currency band and a shift to a zero slope. The Monetary Authority of Singapore uses the exchange rate rather than interest rates to conduct policy. The central bank adjusts the pace of appreciation or depreciation against an undisclosed trade-weighted band of currencies by changing the slope, width and center of the band. The Singapore currency appreciated 0.7 percent to S$1.2693 per dollar. To contact the reporters on this story: Keith Jenkins in London at kjenkins3@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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