The yen declined for a second day against the euro on speculation a
$586 billion stimulus package unveiled by China will give investors
more confidence to buy higher-yielding assets using money borrowed in
Japan.
The yen fell the most versus the South African rand and Australian
dollar as stocks and commodities rose following China's announcement.
The dollar weakened against the euro, British pound and Indian rupee
after the Group of 20 nations said it's ready to act ``urgently'' to
prop up global growth.
``China and the tone of the G-20 meeting are clearly going to provide
some support to the economic outlook,'' said Tony Morriss, a currency
strategist at Australia & New Zealand Banking Group Ltd. in Sydney.
``This would reduce risk aversion. The yen looks weak overall.''
China's stimulus plan, equivalent to almost a fifth of last year's
gross domestic product, is a response to a slump in its major export
markets. Japan will contract 0.2 percent next year, the U.S. by 0.7
percent and the euro area 0.5 percent, while China will expand 8.5
percent, the International Monetary Fund said last week, predicting the
first simultaneous recession in the U.S., Japan and euro region in the
post-World War II era.
Stocks rose in Europe and Asia today and U.S. index futures climbed as
appetite for higher-yielding assets improved. The MSCI World Index
added 1.5 percent. Europe's Dow Jones Stoxx 600 Index advanced 2.7
percent and futures on the Standard & Poor's 500 Index climbed 2.1
percent. The MSCI Asia Pacific Index added 3.1 percent.
``Optimism over China's stimulus plan is contributing to stock market
gains,'' said Takeshi Tokita, vice president of foreign-exchange sales
in Tokyo at Mizuho Corporate Bank, a unit of Japan's second-largest
publicly traded lender. ``This is helping to calm investor sentiment
and causing the yen to weaken.''