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Yen Falls as Chinese Growth Beats Analyst Forecasts; Pound Rises

April 16 (Bloomberg) -- The yen fell the most a week against the euro after data showed China’s economic growth slowed less in the first quarter than analysts forecast, damping demand for safer assets.

Japan’s currency dropped against all except one of its 16 major counterparts as the nation’s stocks gained and central bank Governor Haruhiko Kuroda told parliament it was not appropriate to discuss an exit from stimulus at such an early stage. The pound rose after the U.K. jobless rate slipped below the Bank of England’s threshold for considering an interest-rate increase. New Zealand’s dollar slumped after inflation unexpectedly slowed and dairy prices extended a decline.

“The data from China didn’t turn out to be a disaster and that’s encouraging,” said Jeremy Stretch, head of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London. “That, combined with a rally in stocks, and comments from the Bank of Japan are probably weighing on the yen.”

The yen fell 0.5 percent to 141.52 per euro at 7:28 a.m. New York time, the biggest decline since April 9. Japan’s currency dropped 0.3 percent to 102.27 per dollar after sliding 0.4 percent in the previous three days. The dollar depreciated 0.2 percent to $1.3838 per euro.

China’s economy expanded 7.4 percent from a year earlier, the National Bureau of Statistics said in Beijing, more than the forecast of 7.3 percent in a Bloomberg News survey.

Market Confusion

Kuroda told parliament the Bank of Japan will make the utmost effort to achieve 2 percent inflation. He said ending stimulus prematurely may invite market confusion. The BOJ will expand what is already unprecedented easing by July, according to 72 percent of economists surveyed by Bloomberg. Policy makers announce their next decision on April 30.

The yen has dropped 4.2 percent in the past six months, the worst performer after the Canadian dollar of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro gained 2.1 percent, while the dollar declined 0.4 percent.

The Canadian dollar was little changed at C$1.0987 per U.S. dollar before the Bank of Canada sets interest rates today. Policy makers will keep the benchmark rate unchanged at 1 percent for a 29th month, according to all 18 economists surveyed by Bloomberg News.

Sterling Strength

The pound approached a four-year high versus the dollar as the unemployment rate dropped below the 7 percent threshold that Bank of England Governor Mark Carney set as an initial guide for considering increasing interest rates. The report also showed that wage growth accelerated in the period to 1.7 percent, matching the inflation rate in February.

“The unemployment data is pretty encouraging and we like sterling from here,” said Josh O’Byrne, a currency strategist at Citigroup Inc. in London. “This opens up the possibility that the Bank of England may need to raise interest rates sooner than the market is expecting.”

The pound rose 0.4 percent to $1.6794 after climbing to $1.6823 on Feb. 17, the highest level since November 2009. Sterling strengthened 0.2 percent to 82.40 pence per euro.

The kiwi fell against all of its 16 major counterparts as Statistics New Zealand said the annual inflation rate slowed to 1.5 percent in the first quarter from 1.6 percent in the final three months of 2013. Economists predicted an acceleration to 1.7 percent, according to a Bloomberg survey.

“If inflation pressures are declining, then the pressures to increase interest rates in New Zealand become slightly less,” said Derek Mumford, director at Rochford Capital, a currency risk-management company in Sydney. “If interest rate expectations get wound back a little bit, then obviously that’s negative for the kiwi dollar.”

The GlobalDairyTrade Price Index dropped 2.6 percent in a bi-weekly auction yesterday, extending its decline in the last five events to 21.9 percent. New Zealand’s Fonterra Cooperative Group Ltd. is the world’s biggest dairy exporter.

The New Zealand dollar declined 0.5 percent to 86.00 U.S. cents after sliding 0.5 percent yesterday.

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