By Lukanyo Mnyanda and Yoshiaki Nohara April 1 (Bloomberg) -- The dollar traded near a one-week low against the euro as signs the global economic recovery is accelerating sapped demand for the currency as a refuge. The yen depreciated the most against the South Korean won and South African rand as investors sought higher-yielding assets. The MSCI World Index of equities gained for the fifth day in six, and reports showed Chinese manufacturing accelerated while confidence among Japan’s industrial companies improved. The franc rose to a record against the euro as Swiss industrial output expanded at the fastest pace in more than three years. “There’s been more willingness to edge away from the dollar and take a bit more risk,” said Stuart Bennett, a senior foreign-exchange strategist at Credit Agricole Corporate and Investment Bank in London. “The yen is still looking vulnerable.” The dollar traded at $1.3496 per euro as of 10:21 a.m. in London from $1.3510 in New York yesterday. It earlier touched $1.3561, the weakest since March 23. The yen was at 126.08 per euro from 126.27. Earlier, it traded at 126.63, the lowest level since Feb. 3. The U.S. currency was at 93.42 yen from 93.47 yen after climbing to the strongest level since Jan. 8. The Bloomberg-JPMorgan Asia Dollar Index, a gauge of the region’s 10 most-used currencies excluding the yen, was headed for its highest close in 19 months. The MSCI Asia Pacific Index of regional shares rose 1.1 percent and the Stoxx Europe 600 Index advanced 1 percent. China, Japan Reports China’s Purchasing Managers’ Index rose to 55.1 in March from 52 in February, according to Li & Fung Group, a Hong Kong- based company that released data for the Federation of Logistics and Purchasing. The result was in line with the median estimate in a Bloomberg survey of economists. The Bank of Japan’s Tankan survey showed confidence among Japanese large manufacturers was minus 14 in the three months ended in March, the strongest level since September 2008 and matching the median forecast of economists. A negative number means pessimists outnumber optimists. Malaysia’s ringgit climbed as much as 0.2 percent to 3.2520 per dollar, its strongest level since July 2008. South Korea’s won rose 0.5 percent to 1,126.25. The yen fell for a fifth day against the rand, losing 0.4 percent to 12.8786. Korea Growth Bank of Korea Governor Kim Choong Soo said today in his inaugural speech that policy makers’ main task is to stabilize prices and boost employment to help promote economic growth. Korea’s exports rose 35.1 percent in March from a year earlier, the Ministry of Knowledge Economy said today. The median estimate in a Bloomberg News survey of economists was for a 31.7 percent gain. The trade surplus widened to $2.2 billion from 2.1 billion in February. “The ongoing recovery in the global economy has weakened the yen by both reducing safe haven demand and encouraging investors to re-establish short positions to fund long risk asset positions,” Lee Hardman, a strategist at Bank of Tokyo- Mitsubishi UFJ Ltd. in London, wrote in a client note. Losses will be “narrowly focused with weakness most prevalent against other Asian currencies.” The franc rose for a third day against the euro, adding as much as 0.4 percent to 1.4186 against the common currency, the strongest level since the euro’s 1999 debut, before trading at 1.4200. It gained 0.2 percent to 1.0517 against the dollar. Kiwi Drops The SVME purchasing managers’ index climbed to 65.5 from 57.4 in February, adjusted for seasonal swings, Credit Suisse Group AG said in a statement published today in Zurich. That’s the highest since November 2006 and exceeded economists’ forecast of 59, based on the median of nine estimates in a Bloomberg News survey. New Zealand’s dollar declined after the International Monetary Fund said the currency was overvalued, and the nation’s current-account deficit will widen if the currency remains where it is now. “Our estimates suggest the currency is presently overvalued by 10 percent to 25 percent,” the Fund said in its statement. “Part of the overvaluation may be temporary and the exchange rate may depreciate as the interest-rate differential narrows with eventual tightening by the U.S. Federal Reserve.” The so-called kiwi fell 0.7 percent to 70.58 U.S. cents. It dropped 0.8 percent to 65.86 yen. Benchmark interest rates of 4 percent in Australia and 2.5 percent in New Zealand compare with as low as zero in the U.S. and 0.1 percent in Japan. To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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