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Yen Falls as Japan’s GDP Misses Estimates; Ruble Drops to Record

Feb. 17 (Bloomberg) -- The yen fell as a report showed Japan’s economy expanded less than analysts forecast, boosting speculation the nation’s central bank will add to its stimulus plan that tends to weaken the currency.

The yen declined versus all but two of its 16 major peers, snapping a three-day advance against the dollar. The ruble slid to a record against the Russian central bank’s target basket after a drop in industrial output. Malaysia’s ringgit climbed to a one-month high following data that showed record new credit last month in China, the nation’s biggest trading partner. Indonesia’s rupiah and Mexico’s peso also rose, while Sweden’s krona weakened. Markets in the U.S. were closed for a holiday.

“The market is really shorting the Japanese yen,” Eimear Daly, head of market analysis at Monex Europe Ltd. in London, said, referring to bets the currency will decline. “The data is so poor considering everyone was expecting a rebound in the fourth quarter. It raises the question of if we get more easing coming from Japan.”

The yen declined 0.2 percent to 139.67 per euro at 4:12 p.m. London time. It slipped 0.1 percent to 101.90 per dollar, after gaining 0.8 percent in the past three days. The 18-nation shared currency strengthened 0.1 percent to $1.3707.

Japan’s gross domestic product expanded at an annualized 1 percent pace in the final three months of 2013, down from 1.1 percent growth in the preceding quarter, the Cabinet Office said today. The median estimate of analysts surveyed by Bloomberg News was for a 2.8 percent expansion.

Policy Easing

The Bank of Japan is buying about 7 trillion yen in domestic bonds each month to try to spur inflation, helping the yen weaken 18 percent against the dollar last year, the most among Group-of-10 currencies.

“The Japanese GDP report for the fourth quarter proved disappointing, which is reinforcing investor expectations that the BOJ may need to ease monetary policy further later this year,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. Even so, there is “no immediate need in our view,” he said.

The ruble lost 0.5 percent to 40.1010 against the basket of euros and dollars by 6 p.m. in Moscow, when Bank Rossii stops its market operations. Industrial production fell 0.2 percent in January from a year ago, the Federal Statistics Service said. The median estimate in a Bloomberg survey of 19 economists was for a 1 percent increase.

Russia’s Finance Ministry, which plans to buy about $6 billion of foreign currency to replenish its sovereign wealth funds, may comment this week on the plan, the Prime news service reported Feb. 13, citing Deputy Finance Minister Alexey Moiseev.

Ruble Pressure

“The pressure on the ruble will persist until the Finance Ministry makes its final decision on the way it converts money for the Reserve Fund,” Evgeny Koshelev, an analyst at OAO Rosbank in Moscow, wrote in an e-mailed note.

Malayisa’s ringgit climbed after the People’s Bank of China said in a Feb. 15 statement that aggregate financing, the broadest measure of credit, increased to an unprecedented 2.58 trillion yuan ($425.5 billion) in January.

“These numbers provide some confidence that growth is still ticking along, and are good for the Aussie, kiwi and emerging-market currencies,” said Ray Attrill, the global co- head of currency strategy at National Australia Bank Ltd. in Sydney. “China is still a credit-driven economy.”

Peso, Krona

The ringgit gained as much as 0.6 percent to 3.2863 per dollar, the strongest level since Jan. 15, before trading at 3.2945. The Aussie touched 90.69 U.S. cents, the highest level since Jan. 13, before slipping to 90.29 cents.

Indonesia’s rupiah climbed to a three-month high as the nation’s current-account deficit narrowed.

The currency rose for a fifth day, adding 0.3 percent to 11,785 per dollar, after touching 11,658, the strongest level since Nov. 20, prices from local banks show. The Mexican peso strengthened 0.4 percent to 13.1907 per dollar, climbing the most among the 16 major currencies.

Sweden’s krona slid before inflation data tomorrow that economists said will show consumer prices increased 0.1 percent in January from a year earlier, leaving the pace unchanged for a third month.

The Swedish currency weakened 0.3 percent to 8.8525 per euro and dropped 0.2 percent to 6.4589 per dollar.

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