The yen rose against the euro for the first time in three days and gained versus the dollar on bets a drop in stocks will reduce purchases of higher-yielding assets funded by low-cost loans in Japan's currency.
The pound dropped to a record against the euro as U.K. home sales declined to the lowest in at least three decades. The ruble fell the most in two months versus the dollar-euro basket after the central bank said it may let Russia's currency weaken. The yen also rose against South Africa's rand and Brazil's real on bets carry trades will unwind.
``When you have a heavy storm, it won't clear any time soon,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``I still like the yen.''
The pound fell per euro after the Royal Institution of Chartered Surveyors said U.K. home sales declined in the quarter through October to the lowest in at least three decades.
The euro fell versus the dollar as traders increased bets that the European Central Bank will reduce its 3.25 percent rate in the first quarter of next year to kickstart economic growth. The implied yield on Euribor futures contracts expiring in March fell to 2.790 percent from 2.855. The ECB benchmark is 0.46 percentage point higher than the contract yield, compared with a 12-month average of 0.19 percentage point below the futures rate.
ECB council member Guy Quaden told Bloomberg News yesterday in Sao Paulo that he expects the bank to reduce its forecasts for economic growth and inflation ``substantially'' next month, paving the way for lower rates.
``The euro area's economy isn't doing well, and rate cuts are likely to continue,'' said Yuji Saito, head of the foreign- exchange group in Tokyo at Societe Generale SA, France's second- largest bank by market value. ``The euro may be sold.''
Leaders of the Group of 20 industrial and emerging nations, due to gather Nov. 14-15 in Washington, will consider steps ranging from raising bank-capital standards to regulating hedge funds to address the financial crisis. Member nations' finance ministers called for interest-rate cuts and increased government spending after meeting this week in Sao Paulo.