The yen fell against most major currencies as government efforts to revive global economic growth reduced the Japanese currency’s haven appeal. Australia’s dollar was the biggest gainer versus the yen after the Reserve Bank cut the overnight cash rate target to a 45-year low of 3.25 percent and the government said it will spend A$42 billion ($26.5 billion) to sustain the economy. The pound weakened for a second day versus the euro as a report showed U.K. construction shrank last month. “We’ve seen some risk appetite coming back,” said Matthew Strauss, a senior currency strategist in Toronto at RBC Capital Markets Inc., a unit of Canada’s biggest bank by assets. “The market is still undecided, very much range-bound.” The euro increased 0.2 percent to 115.15 yen at 8:44 a.m. in New York, from 114.89 yesterday. The dollar traded at 89.48 yen compared with 89.45. The dollar fell 0.2 percent to 1.2872 per euro from $1.2843 yesterday, when it reached $1.2706, the strongest level since Dec. 5. The yen fell versus the dollar and euro for the first time in four days after the Bank of Japan said it will buy 1 trillion yen ($11.2 billion) of shares held by financial companies, reviving demand for higher-yielding assets. “The Bank of Japan’s purchases may also be aimed at staving off the exceeding positive bias in the currency,” wrote Ashraf Laidi, the chief market strategist in London at CMC Markets, in a note to clients. “Recall that the Bank of Japan purchases of Japanese shares in 2002 coincided with yen-selling intervention.” Australian Spending Japan’s currency dropped 1.1 percent to 57.13 against the Aussie after Australian Treasurer Wayne Swan announced a spending package that includes A$12.7 billion in grants to families and low-income earners and A$28.8 billion for infrastructure. The measures will help the economy grow 1 percent this fiscal year and 0.75 percent in the year ending in June 2010, government figures show. The Reserve Bank of Australia cut its benchmark rate by 1 percentage point to the lowest level since February 1964. The pound fell 0.3 percent to $1.4221 and 0.4 percent to 90.39 pence per euro as the Chartered Institute of Purchasing and Supply and Markit said a U.K. index based on a survey of purchasing managers at building companies dropped to 34.5 in January. Hungary’s forint tumbled as much as 1.5 percent to a record low of 299.91 versus the euro on concern the economic slowdown will worsen. The currency extended this year’s decline to 11.5 percent. Weaker Pound Sterling dropped for a second day versus the yen, dropping 0.3 percent to 127.23, as investors maintained bets that the Bank of England will cut its 1.5 percent main rate at its next meeting on Feb. 5 to help counter the nation’s recession. The central bank will lower its target by at least a quarter- percentage point, according to a Credit Suisse Group AG index based on swaps. Investors should be wary of betting the U.K. will have a currency crisis similar to that in Iceland, according to Jim O’Neill, chief economist at Goldman Sachs Group Inc. “The pound is very cheap for the first time in our professional history,” O’Neill said today at a foreign-exchange seminar in London. “You need to make sure that the U.K. is Reykjavik-on-Thames before you bet against the pound.” The euro fell earlier to near an eight-week low versus the dollar after the European Union statistics office in Luxembourg reported that the prices of goods leaving euro-area factories dropped 1.3 percent in December after a 2 percent decline in previous month. The median forecast of 22 economists surveyed by Bloomberg News was for a 1.2 percent reduction. Weighing on Euro “Any weakness of European data is likely to weigh on the euro,” said David Woo, the London-based global head of foreign- exchange strategy at Barclays Capital. “Even though the interest-rate differential is so small between the U.S. and Europe, we find that euro-dollar is becoming more acutely sensitive to it. The market is pricing in the European Central Bank’s terminal rate at 1 percent.” Woo said the euro may fall to $1.25 in three months and that it wouldn’t fall “significantly below” $1.20 as the U.S. will increase its budget deficit to finance a possible $885 billion fiscal stimulus plan. ECB President Jean-Claude Trichet reiterated in an interview on Bloomberg Television at the World Economic Forum in Davos, Switzerland, last week that the central bank’s next important meeting is in March, signaling policy makers will keep the rate unchanged at 2 percent on Feb. 5. “Our economists still expect the next policy rate cut to come in March, but the dropping inflation data and the worsening economy raise the possibility of a cut in February,” London- based UBS AG analyst Geoffrey Yu wrote in a note to clients. “We prefer to be short euros.” A short position is a bet a currency will decline.

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