The yen declined most versus the South African rand and Korean won as investors resumed buying higher-yielding assets with loans from Japan. The yen still headed for a weekly gain of 1.6 percent against the dollar. The euro was poised for its biggest weekly drop versus the U.S. currency in more than a month on speculation the European Central Bank may cut interest rates.
The yen weakened to 107.35 per dollar at 7:41 a.m. in New York, from 106.54 yesterday. Japan's currency declined to 157.45 per euro from 155.99, the first drop since Jan. 14, paring its weekly gain against the common European currency to 2.1 percent. The euro was at $1.4666, from $1.4642 yesterday. It has dropped from $1.4776 on Jan. 11.
Japan's Nikkei 225 Stock Average climbed 0.6 percent, reversing an earlier 3 percent loss. The FTSE 100 Index, the benchmark in the U.K., rose 1.3 percent, headed for its biggest advance since Dec. 21, and S&P 500 stock-index futures maturing in March increased 1 percent.
The yen declined as much as 2.3 percent to 15.33 per rand, its biggest drop in more than a month. The South Korean won climbed as much as 1.4 percent to 11.4 yen. Both are favorites of the carry trade.
Japan's benchmark rate of 0.5 percent is the lowest among the major economies and compares with 4.25 percent in Canada and 4 percent for the 15 nations using the euro.
Japan's low rates encourage carry trades, where investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the spread between the two. The risk is that currency market moves erase those profits.