April 27 (Bloomberg) -- The yen rose to a four-week high against the dollar after Lawrence Summers said the U.S. economy will keep shrinking and as the spread of swine flu boosted demand for Japan’s currency as a refuge from the recession.
The Mexican peso led declines in high-yielding currencies after more than 80 people died of swine flu in the nation and cases were confirmed in the U.S. and Canada, fueling concern global tourism will slump.
The euro fell the most in a week against the dollar and the yen on speculation the European Central Bank will lower interest rates at its meeting next month and signal it will take additional measures to keep down borrowing costs. “The market is returning to pessimism-driven trading,” said Daisuke Uno, chief strategist in Tokyo at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest bank. “This means that the yen may be bought.”
The yen advanced to 96.57 per dollar as of 7:40 a.m. in London from 97.17 last week in New York. It rose as high as 96.53, the strongest level since March 30. Japan’s currency advanced to 126.91 per euro from 128.66. The dollar climbed to $1.3143 per euro from $1.3242. The Mexican peso declined 2.2 percent to 13.6402 per dollar, the Australian dollar fell 1.5 percent to 71.25 U.S. cents, and the New Zealand currency dropped 1.6 percent to 56.34 U.S. cents. The yen may strengthen to 90 against the greenback by the middle of next month, Uno said.