Dollar Drops to Post WWII Low Against Yen

The dollar dropped to a post-World War II low against the yen and fell versus most major currencies on speculation Europe is moving closer to resolving its debt crisis and the Federal Reserve may seek further monetary easing.

The euro advanced for a fourth day against the dollar, in the longest stretch of gains since July, before two European summits over the next five days. South Africa’s rand and Australia’s dollar rallied as stocks and commodities increased, boosting demand for higher-yielding assets. The dollar remained lower versus the yen as Fed Vice Chairman Janet Yellen said new purchases of securities may be appropriate.

“Clearly the dollar is weaker against the euro on speculation that there is going to be a happy ending to the debt crisis,” said Greg Salvaggio, senior vice president of capital markets at the currency trader Tempus Consulting Inc. in Washington. “There’s a risk-on feeling in the market.”

The yen appreciated 0.7 percent to 76.29 versus the dollar at 5 p.m. in New York after touching a record high 75.82. The euro rose 0.8 percent to $1.3896, extending its weekly gain to 0.1 percent. The euro rose 0.1 percent to 105.97 yen.

The dollar dropped before meetings in Europe this weekend as bets that the U.S. currency would rally dropped from the highest level in more than a year.

“There’s broad-based dollar selling,” said Robert Sinche, global head of currency strategy at Royal Bank of Scotland Group Plc in Stamford, Connecticut. “It could just be a market that’s long of dollars and short of risk and other currencies. It’s Friday, and people are uncomfortable going into the weekend with those positions.”