Economy Watch

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 Oct. 6 (Bloomberg) -- The dollar fell for a second day against the yen as the Independent newspaper said Gulf states may switch to a basket of currencies for oil trading. The yen rose after Japan’s finance minister said he told Group of Seven leaders weak-currency policies were undesirable.

The dollar declined against 14 of its 16 major counterparts as Asian stocks rallied and the Independent cited banking sources in Hong Kong as saying Gulf states along with Japan and China are discussing dropping the dollar for oil trades. The euro rose before a report forecast to show German factory orders increased for a sixth month. Australia’s dollar surged after the nation’s central bank raised benchmark interest rates.

“I do think that eventually there will be a move to non- dollar commodity contracts, and it may be the next big risk for the dollar,” said Ben Simpfendorfer, chief China economist for Royal Bank of Scotland Group Plc in Hong Kong. “At the same time I don’t want to overplay the importance of the story. There’s no credible sources there.”

The dollar fell to 89.11 yen at 12:38 p.m. in Tokyo from 89.53 yen in New York yesterday. The euro climbed to $1.4710 from $1.4648. The euro fetched 131.05 yen from 131.15 yen.

http://www.bloomberg.com/apps/news?pid=206...id=ai4e1MZcvHBc