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Summary
The dollar fell below 87 yen in Tokyo trade Thursday to its lowest level in 14 years, a drop traders blamed in part on expectations the Federal Reserve will keep interest rates near zero. The greenback briefly dipped to 86.51 yen and was trading at its lowest level since July 7, 1995, according to analysts. The background to the dollar's fall against the yen is the growing view that US interest rates are going to stay very low for quite some time, an analyst for a Japanese brokerage told Dow Jones Newswires. The greenback was also hit as positive US economic data Wednesday raised risk appetite for other currencies. This yen strengthening is caused by dollar selling rather than yen buying, so this is not something Japan can handle by itself, said Mizuho Securities senior technical analyst Yutaka Miura. This trend will continue unless the Japanese government takes action, in cooperation with the US. Despite the greenback's fall and the yen's rapid ascent, Japanese officials downplayed speculation that the government will intervene in markets. Finance Minister Hirohisa Fujii said Tokyo will watch currency markets carefully, but said it will take proper action only if foreign exchange movements become too abnormally volatile. Traders said they did not see the remarks as indicating currency intervention anytime soon. Japan has not intervened on foreign exchange markets since March 2004, allowing the yen to find its own level. The strong yen dragged down auto and technology stocks as a stronger currency hurts their exports. The benchmark Nikkei index was down 0.56 percent at 9,388.41.
