The yen and the dollar rose against the euro as U.S. regulators are set to say Bank of America Corp. needs $34 billion in new capital, boosting demand for the relative safety of the two currencies. Japan’s currency climbed versus the greenback by the most in more than a week as Bank of America faces the largest need for new capital among the 19 banks reviewed, according to a person familiar with the matter. The euro fell the most in more than a week against the yen on concern the European Central Bank tomorrow will cut interest rates and buy debt to stem the slump. “The reported amount of capital needed by Bank of America is very large, causing risk aversion,” said Masashi Kurabe, head of currency sales and trading in Hong Kong at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest publicly traded bank. “As such, the yen and the dollar are being bought as ‘safe-haven’ currencies.” The yen rose 0.8 percent, the most since April 24, to 98.06 per dollar as of 12:18 p.m. in Singapore from 98.82 yesterday in New York. Japan’s currency climbed 1.2 percent, the most since April 27, to 130.14 per euro from 131.73 in New York yesterday. The dollar advanced to $1.3273 per euro from $1.3330. The Dollar Index, used by the ICE to track the greenback versus the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, increased to 84.311 today from 84.157 yesterday. Fed Stress Tests The Japanese and U.S. currencies gained as the Federal Reserve plans to deliver results of stress tests on U.S. banks that may show about 10 companies need additional capital, people familiar with the matter said. Citigroup Inc.’s shortfall is more limited because the company already plans to convert government preferred shares to common stock, the people said. JPMorgan Chase & Co. doesn’t need a deeper reserve against potential losses over the coming two years, according to people familiar with that company’s result. Treasury futures contracts rose for a third day on speculation the stress-test results will feed demand for the relative safety of government debt. The yield on 10-year futures contracts for June delivery fell three basis points to 3.47 percent in Singapore, based on electronic transactions at the Chicago Board of Trade. The price rose 7/32, or $2.19 per $1,000 face amount, to 121 6/32. Ten- year notes yielded 3.16 percent. Trading of Treasuries is closed in Japan today for a holiday. Asian Currencies Fall South Korea’s won led declines in Asian currencies amid concern policy makers will need to take more steps to shore up banks and support economic growth because of the global credit crisis. The won tumbled 1 percent to 1,281 per dollar and the rupiah slid 0.5 percent to 10,498, according to data compiled by Bloomberg. “Investors are likely to be risk averse ahead of the release of the results” of the stress tests, said Norifumi Yoshida, vice president of the trading section in Singapore at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest bank. “We can’t rule out the possibility that the yen and the dollar will be bought” as a shelter from the crisis, he said. Federal Reserve Chairman Ben S. Bernanke yesterday warned that another shock to the financial system would undercut the central bank’s forecast that the U.S. recession will give way this year to a slow recovery. Stocks Decline The MSCI Asia-Pacific Index excluding Japan fell 0.2 percent today after the Standard & Poor’s 500 Index declined 0.4 percent yesterday. The benchmark for U.S. stocks had rallied 34 percent in eight weeks, rebounding from a 12-year low to erase all of this year’s drop, on optimism the global slump may be easing. Australia’s dollar fell to 73.61 U.S. cents from 74.26 cents and dropped to 72.30 yen from 73.35 yen in New York yesterday. New Zealand’s dollar slipped to 57.78 cents from 58.04 cents, and weakened to 56.74 yen from 57.34 yen. The benchmark interest rate is 0.1 percent in Japan and as low as zero in the U.S., compared with 3 percent in Australia and 2.5 percent in New Zealand, making the South Pacific nations’ assets attractive to investors seeking higher returns. Europe’s single currency weakened as the ECB will probably lower the benchmark rate by a quarter-percentage point to 1 percent tomorrow, according to a Bloomberg survey of economists. That would be the lowest level since the bank took charge of monetary policy in 1999. “The ECB will at least announce something unusual,” said Sean Callow, senior currency strategist at Westpac Banking Corp. in Sydney. “In terms of policy measures, they’ll be discussing the types of measures that would potentially weaken the euro.” The volume of foreign-exchange trading will likely be less than normal because of Japan’s “Golden Week” holiday today, Callow said. ECB council member Athanasios Orphanides said yesterday the financial crisis needs “drastic” measures. Orphanides and fellow member George Provopoulos from Greece have indicated they may support cutting the target rate to less than 1 percent and buying debt to pump money into the economy.

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