The yen weakened from near its postwar record against the dollarand the Swiss franc fell amid speculation policy makers in bothcountries will seek to curb gains in their currencies that arehurting exporters.

The yen dropped the most in two weeks after Japan's FinanceMinister Yoshihiko Noda said he's ready to take decisive stepsafter the currency strengthened to 75.95 against the greenback onAug. 19. Most Swiss support intervention by the Swiss National Bankto curb gains in the franc, SonntagsZeitung reported yesterday,citing a survey. The euro gained for a second day against thedollar as European stocks rallied.

“One of the big drivers for these two currencies has been theheightened speculation of imminent intervention by the Japanese andSwiss authorities,” said Lee Hardman, a currency strategist at Bankof Tokyo-Mitsubishi UFJ Ltd. in London. The yen “probably has themost potential for upside out of the two currencies. The biggestrisk to that would be another bout of coordinated, multilateralintervention to weaken the yen.”

The yen fell as much as 0.9 percent to 77.21 per dollar beforetrading 0.3 percent weaker at 76.81 as of 7:02 a.m. in New York.That was the biggest decline since Aug. 4, the day Japan sold itscurrency. The yen depreciated 0.5 percent to 110.78 per euro.

The Swiss franc lost 0.3 percent to 1.1340 per euro, and was 0.2percent weaker at 78.69 centimes per dollar. The euro gained 0.2percent to $1.4422.

'Bold Actions'
Noda told reporters inTokyo today he's become “more concerned about the worsening of theyen's one-sided movements.” The government will take “bold actionsif necessary and won't rule out any possible options,” he said.

Bank of Japan Deputy Governor Hirohide Yamaguchi said in Beijingyesterday he was “worrying” about the yen's gains, noting also thata stronger currency won't “necessarily” damage the economy. Thecomments were clarified by a BOJ official in Tokyo, who said thatwhile the deputy doesn't see currency gains having a big effect onthe economy immediately, he is concerned about what the effect mayeventually be.

The franc weakened against all but one of its 16 majorcounterparts amid speculation the Swiss central bank will introducenew measures to damp demand for the nation's currency. The centralbank, which earlier this month cut borrowing costs to zero andincreased bank sight deposits almost sevenfold, left the door openfor further measures to curb gains in the franc.

'Market is Wary'
“Those are two currencieswhere authorities are actually intervening and looking to stopappreciation,” said Khoon Goh, Wellington-based head of marketeconomics and strategy at ANZ National Bank Ltd. “The market iswary of any measures the SNB may take.”

Of 1,004 people questioned Aug. 18-20, 63 percent favoredcentral bank action to curb gains in the franc even if it stokesinflation, SonntagsZeitung reported, citing a poll by marketresearch company Isopublic AG. The newspaper also saidSwitzerland's Cabinet expects the SNB to set an exchange-ratetarget of at least 1.2 francs per euro, without saying where it gotthe information.

SNB spokesman Walter Meier declined to comment on whether thecentral bank had intervened in the currency market, when contactedby Bloomberg News today. Finance Ministry spokesman Roland Meieralso declined to comment on speculation the franc would be peggedat a targeted 1.20 to the euro.

Biggest Gainer
The franc has advanced 10percent over the past three months, the biggest gainer among 10major-economy currencies tracked by Bloomberg Correlation-WeightedIndexes. The yen has risen 4.5 percent and the dollar is down 2.4percent.

The franc and yen tend to strengthen during periods of financialturmoil because their export-reliant economies don't need foreigncapital to balance current accounts — the broadest measure oftrade.

The euro strengthened against the dollar, yen and franc asEuropean stocks rebounded from a two-year low with the benchmarkStoxx Europe 600 Index climbing 1.4 percent.

Markit Economics announces tomorrow its composite index based ona survey of euro-area purchasing managers in the services andmanufacturing industries. The index fell to 50 in August from 51.1in July, according to economists polled by Bloomberg News. Areading above 50 indicates growth.

'Considerably Slower'
The Dollar Indexextended losses from last week amid speculation Federal ReserveChairman Ben S. Bernanke will signal at an Aug. 26 conference inJackson Hole, Wyoming, that the Fed will increase monetary stimulusto boost the economy. The central bank bought $600 billion inTreasuries from November through June in its second round ofquantitative easing, or QE2.

The Fed said Aug. 9 that U.S. economic growth was “considerablyslower” than anticipated and it's prepared to use a range of policytools to boost the economy. It pledged to keep interest rates nearzero at least until mid-2013.

“The market focus is on Bernanke's speech this week,” JunichiIshikawa, a Tokyo-based market analyst at IG Markets SecuritiesLtd. wrote in a note to clients today. “There may be increasingdownward pressure for the dollar, should he mention the possibilityof QE3.”

The Dollar Index, which tracks the greenback against thecurrencies of six major trading partners, was fell 0.2 percent to73.841 from 74.009 last week, when it fell 0.8 percent.

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