Yen Rises on Concern European Debt Crisis Will Worsen

The yen strengthened against all its 16 most-traded counterparts as stocks fell and the International Monetary Fund said its 26 billion-euro ($38 billion) loan to Portugal “entails important risks.”

The euro slid from a four-week high versus the dollar after German Finance Minister Wolfgang Schaeuble said bondholders must contribute a “substantial” share of a second aid package for Greece. The yen rose to the strongest in a month against the dollar as Federal Reserve Chairman Ben S. Bernanke said the “frustratingly slow” U.S. recovery warrants sustained monetary stimulus. The MSCI World Index declined 0.5 percent.

“The way the slow-burning European crisis is impacting the euro itself is every so often when people worry about an immediate near-term extra risk coming through it does weigh on the currency,” said David Mann, regional head of research for the Americas at Standard Chartered in New York.

The yen appreciated 0.4 percent to 79.78 per dollar at 8:35 a.m. in New York, from 80.09 yesterday, after touching 79.70, the strongest level since May 5. It strengthened 1 percent to 116.52 per euro, from 117.67. The euro declined 0.6 percent to $1.4604 from $1.4691 yesterday, when it reached $1.4697, the most since May 5.

“It’s reasonable to expect we’re going to test the May low of 79.57 for the yen and beyond that the really big level will be 78.90 will be the next big support level,” Mann said.