The yen fell for the first time in four days against the dollar after Chinese manufacturing expanded at the fastest rate in two years, sapping demand for refuge assets. Japan’s currency dropped at least 0.4 percent versus all of its 16 major counterparts after Deputy Economy Minister Yasutoshi Nishimura said its decline isn’t over and a level of 100 per dollar wouldn’t be a problem. The euro rose as a regional report showed the contraction in manufacturing and services slowed this month. Asian currencies fell against the dollar after North Korea threatened to test nuclear weapons. “Yen selling accelerated after the Chinese data,� said Yuji Saito, director of the foreign-exchange department at Credit Agricole SA (ACA) in Tokyo. “The weakness in the yen has been reinforced as the market is selling Asian assets amid rising geopolitical risks in North Korea.� The yen fell 0.9 percent to 89.38 per dollar at 9:05 a.m. London time after strengthening 1.7 percent during the previous three days. Japan’s currency slid to 90.25 on Jan. 21, the weakest level since June 2010. The yen declined 0.9 percent to 119.11 per euro. The euro was little changed at $1.3326. HSBC Holdings Plc and Markit Economics said their preliminary reading of China’s Purchasing Managers’ Index increased to 51.9 in January from 51.5 the previous month. The data suggest China’s expansion at the start of 2013 will equal or exceed its 7.9 percent pace in the fourth quarter. ‘Isn’t Over’ Nishimura said a yen at 100 to the dollar would be acceptable, suggesting that global criticism may fail to convince Prime Minister Shinzo Abe to temper his push to weaken the currency. “The current level around 90 can be said to be a correction of the strong yen, but it isn’t over yet,� Nishimura said in an interview in Tokyo. He said a level of 110 to 120 would raise import costs, echoing the view of Abe’s adviser Koichi Hamada and suggesting the government won’t back a currency free-fall. Japanese imports exceeded exports by 641.5 billion yen last month, compared to a 954.8 billion yen gap in November, the Ministry of Finance said today. Exports dropped by more than forecast and the annual trade deficit was a record 6.93 trillion yen, the data showed. The yen has weakened 18 percent in the past six months, the worst performer of 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar dropped 4.8 percent and the euro advanced 6 percent. Euro Climbed The euro climbed against all except three of its 16 major counterparts after Markit Economics released its survey of purchasing managers in manufacturing and services. A composite index based on the survey climbed to 48.2 this month from 47.2 in December, the data showed. A reading below 50 indicates contraction. North Korea threatened to conduct a nuclear weapons test “targeted� at the U.S. after the Obama administration pushed through new United Nations sanctions against the state for its rocket launch last month. South Korea’s won declined 0.3 percent to 1,068.85 per dollar and the Taiwan dollar dropped 0.2 percent to 29.138. To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

Source