March 31 (Bloomberg) -- The yen weakened against all of its 16 major counterparts as Russia and the U.S. sought a diplomatic solution to the crisis in Ukraine, reducing demand for havens.
The yen pared its biggest quarterly gain since the three months through September 2012 after U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov met yesterday. Turkey’s lira led emerging-market currencies higher after Prime Minister Recep Tayyip Erdogan’s party won in local elections, and Russia’s ruble also appreciated. The euro rose against the dollar even as a report showed inflation in the nations that share the currency slowed more than economists predicted.
“We haven’t seen an extension or proliferation of crisis mentality,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. Turkey’s polls added to “a combination of factors that keep the yen very much on the defensive,” he said.
Japan’s currency weakened 0.4 percent to 103.22 per dollar at 7:28 a.m. New York time, cutting its advance this quarter to 2 percent. It declined 0.7 percent to 142.43 per euro. The 18- nation shared currency climbed 0.4 percent to $1.3800, after falling to $1.3705 on March 28, the lowest since Feb. 28.
The ruble added 1.3 percent against the dollar after Kerry said “ideas and suggestions” were discussed and he would consult with President Barack Obama on the next steps to reduce tension eastern Europe. He and Lavrov, at separate briefings, said the sides would hold further talks to seek an outcome acceptable to Ukraine.
Turkey’s currency jumped as much as 2 percent to 2.1468 per dollar, the strongest since Jan. 2, before trading at 2.1488. Erdogan’s Justice and Development Party, or AKP, won 46 percent of the vote yesterday, according to unofficial results reported by NTV television with 98 percent of ballot boxes counted. Against the backdrop of the corruption probe, his party polled stronger than it did in the 2009 municipal vote, when it won 39 percent.
Consumer prices in the euro area increased 0.5 percent in the year through this month, after a 0.7 percent gain in February, the European Union’s statistics office in Luxembourg said. That missed the 0.6 percent median forecast in a Bloomberg News survey of 41 economists. The inflation rate has been below 1 percent for six months, while the ECB seeks to keep it at just under 2 percent.
The median estimate of 57 economists surveyed by Bloomberg is for ECB officials meeting on April 3 to keep the benchmark rate at a record-low 0.25 percent, while three are calling for a cut. Central bank President Mario Draghi said on March 25 that policy makers “stand ready to take additional monetary policy measures that ensure our mandate is fulfilled.”
Europe’s common currency has declined 0.3 percent this year against nine developed-nation counterparts, according to Bloomberg Correlation-Weighted Indexes. The dollar has lost 0.8 percent, while the yen has risen 1.5 percent.
The dollar advanced for a third day against the yen today before Federal Reserve Chair Janet Yellen speaks in Chicago.
The U.S. central bank head said this month borrowing costs could rise “around six months” after officials end the Fed’s monthly bond-buying program, which currently stands at $55 billion. The Federal Open Market Committee next meets on April 29-30.
China’s yuan recorded the biggest quarterly decline in two decades after the central bank widened its trading band amid concern growth is losing momentum.
The currency slid 2.6 percent this quarter in Shanghai, the most in China Foreign Exchange Trade System prices dating back to 2007. That’s also the biggest drop since the January-March period of 1994, after the government unified the official and market exchange rates at the start of that year, according to data compiled by Bloomberg before 2007. The yuan fell 0.09 percent today to close at 6.2180 per dollar, 1 percent weaker than the fixing.