Currencies

Dollar sinks to fresh 14-year low vs yen

TOKYO -The dollar sank to a fresh 14-year low against the yen Friday in Asia as worries about Dubai's debt mountain drove investors to buy safe haven assets like the yen.

The Japanese currency briefly touched 84.41 yen — the lowest since mid-1995 — before bouncing back to 86.05 yen. The euro, meanwhile, weakened to $1.4931 from $1.5021 late Thursday.

Concerns about debt problems afflicting Dubai have caused investors to flee riskier assets. Dubai World, a government investment fund with debts totaling around $60 billion, has asked creditors if it can postpone payments until May.

The move toward higher-yielding investments in emerging markets had been growing recently on hopes the world was recovering from the financial crisis. But Dubai's problems have reminded investors of the risks involved, said Minoru Shioiri, chief manager at the foreign exchange section of Mitsubishi UFJ Securities in Tokyo.

"Everyone wants to pull back on the risks, cash in on investments in emerging markets and make an exit," he said.

Finance Minister Hirohisa Fujii said the yen's sharp rise against the dollar is "one-sided" and reiterated concern that it would hurt the nation's export-dependent economy.

Fujii suggested Tokyo may ask for cooperation from the United States and European nations to calm markets. "That may be one of the options we could take depending on conditions," he said, according to Kyodo News agency.

Expectations that U.S. interest rates will remain extremely low are also weighing on the dollar, which has slid steadily over the last few weeks.

Traders remain unconvinced that Japanese authorities will intervene in the currency market to stem the yen's appreciation. Japan hasn't done that since March 2004.

"What the market wants is for (Fujii) to go a step further and say he is actually going to do something. Unless he becomes more specific about taking action, it's not convincing enough," said Akane Vallery Uchida, foreign exchange strategist at the Royal Bank of Scotland.

The dollar has steadily dropped this week after minutes from the latest U.S. Federal Reserve board meeting suggested the central bank wasn't worried about the dollar's decline and that it plans to keep interest rates at "exceptionally low levels" for an "extended period."

Currently the Fed funds rate stands at a range between zero and 0.25 percent, one of the lowest in the world.

Japan's business executives are clearly worried about the yen's appreciation, which cuts into foreign income, on top of falling prices and general weakness in consumer spending.

Fujio Mitarai, chairman of Keidanren, Japan's largest business lobby, urged the government to take action.

"In the midst of deflation, such a sharp rise in the yen is a very serious problem and could drag down the economy," Mitarai told reporters.

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Associated Press Writers Yuri Kageyama and Tomoko A. Hosaka contributed to this report.