(Bloomberg) -- The yen rose to the strongest level in more than six weeks against the euro on speculation the spreading swine flu outbreak will increase demand for safety.

The Mexican peso slumped the most against the dollar in six months yesterday as the World Health Organization raised its pandemic alert to an unprecedented level, fueling concern the spread of the virus will deepen the global recession. The euro may fall for a second day against the dollar after European Central Bank member Ewald Nowotny said yesterday the bank stands “ready to use unconventional measures of quantitative easing” to improve the flow of credit.

“The spread of swine flu has sparked concern over global risk and strengthened risk aversion,” said Yousuke Hosokawa, a senior currency dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest publicly traded bank. “Thus demand for the yen as a refuge will increase.”

The yen traded at 125.42 per euro as of 8:32 a.m. in Tokyo from 126.14 in New York yesterday. It touched 125.34, the strongest since March 12. The yen climbed to 96.30 per dollar from 96.77 yesterday, after reaching 96.28, the highest level since March 30. The dollar was at $1.3022 versus the euro from $1.3036.

Mexico’s currency was at 14.0390 versus dollar from 14.0505 yesterday and fell to 6.874 versus the yen from 6.860.

The Mexican peso fell yesterday against all of the other major currencies tracked by Bloomberg as the government closed schools until May 6 and shut public events to contain the swine flu. The currency dropped 5.1 percent yesterday against the greenback to the weakest level since April 1. It was the biggest decrease since Oct. 15.

Euro Falls

The euro declined yesterday for the first time in five days against the dollar before next week’s meeting of the European Central Bank, at which policy makers will announce whether they intend to take additional measures to push down borrowing costs.

Investors in the past week increased bets the ECB will reduce its 1.25 percent target lending rate at its May 7 meeting. The implied yield on the three-month Euribor interest-rate futures contract for June delivery fell to 1.295 percent yesterday from 1.325 percent a week earlier.

ECB President Jean-Claude Trichet said in New York yesterday that 2009 will be a “very bad year” for the euro region’s economy and a recovery will only emerge next year.