May 18 (Bloomberg) -- The yen fell against the dollar and the euro after Japanese Vice Finance Minister Kazuyuki Sugimoto said “excessive moves” in currencies may hurt the economy.
The yen dropped the most against the Australian dollar and South African rand as Sugimoto told reporters in Tokyo today that bolstering the economy is now the government’s “top priority.” The euro dropped versus the dollar after European Central Bank council member Axel Weber warned against “exaggerating” recent signals the economy is stabilizing. India’s rupee climbed the most in two decades on optimism Prime Minister Manmohan Singh’s election victory will help his party implement reforms.
“Sugimoto said that volatility in the foreign-exchange markets was undesirable, which indicates that the yen is probably at too high a level at the moment,” said Emeric Challier, who manages about $92 million in currencies and fixed- income assets at Avenir Finance Investment Managers in Paris.
The yen weakened to 95.73 per dollar as of 7:08 a.m. in New York, from 95.21 last week, paring its gain this month to 3.1 percent. It depreciated to 128.90 per euro, from 128.43. The euro slid to $1.3466, from $1.3495.
The yen gained 11 percent versus the dollar since the collapse of Lehman Brothers Holdings Inc. last September as investors bought the Japanese currency as a refuge from the financial turmoil.
‘Negative Effect’
“Excessive moves in currencies are undesirable as they would have a negative effect on the Japanese economy,” Sugimoto said today. “We’ll continue to monitor currency markets.”
The yen extended declines after Japan’s local and foreign- currency debt ratings were brought to the same level, Aa2, by Moody’s Investors Service, to reflect that the repayment risk for each is equal.
ECB council member Weber said the central bank has done enough to help the economy and shouldn’t consider further measures unless things get a lot worse, the Financial Times Deutschland reported, citing an interview.
“The crisis has yet to reach the people via job losses,” the newspaper quoted him as saying. “Calling an end to the crisis too early is very risky. People will be disappointed and that could have an enormous impact on confidence.”
Investors raised bets the ECB will cut its 1 percent benchmark at its next meeting on June 4. The implied yield on the three-month Euribor futures contract for June delivery fell to 1.115 percent today, from 1.175 percent a week ago, according to data compiled by Bloomberg. The central bank announced a plan on May 7 to buy 60 billion euros ($80.6 billion) of covered bonds to help keep borrowing costs down.
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