Dollar resists falls against yen

The dollar traded around 85 yen in Asia on Thursday after falling to a 15-year low amid renewed jitters over the health of the global economy, dealers said.

The dollar, which hit 84.73 yen overnight as market players sought a safe-haven, was changing hands at 84.95 yen in Tokyo midday trade. The greenback bought 85.34 yen in New York late Wednesday.

The euro fetched 1.2867 dollars, unchanged from New York where the single European currency tumbled below the sensitive 1.30-dollar level. Against the Japanese unit, the euro fell to 109.40 from 109.73.

“The yen has attracted money amid concerns over the US and European economies,” said Hideaki Inoue, dealer at Mitsubishi UFJ Trust and Banking.

Inoue added the dollar was still under heavy pressure, arguing US retail sales and consumer prices data for July, due out Friday, could send stocks and the dollar down if they proved to be weak.

Investors fled to the safety of the dollar and the yen on Wednesday after the Federal Reserve warned that the US economic recovery was slowing, while the Bank of England lowered its forecast for British economic growth this year.

The rise of the Japanese currency and its effect on an export-driven economy is a worry for Japan’s politicians.

Finance Minister Yoshihiko Noda said late Wednesday the government was “watching the development extremely carefully” after the yen rose to its highest level since July 1995.

Trade and industry minister Masayuki Naoshima said his ministry would be talking to around 200 companies to find out how the yen’s strength is affecting their business.

Many dealers believe Japanese authorities are unlikely to step in with markets at the current level. Japan last intervened in March 2004.

“I wouldn’t say the possibility (of intervention) is zero, but the chances are low.

“Faced with the fragility of their own economies, Europe and the US have guided interest rates lower, which has helped to make their currencies weak,” he said.

“It would be difficult for Japan to get the nod from (western financial capitals) for a big yen-selling intervention. Japan also needs to be seen to practice what it preaches, having urged China to let its currency float freely.”

RBS forex strategist Greg Gibbs told Dow Jones Newswires that the dollar should remain relatively stable for now, given that recent economic reports in Japan have been weak, including those on industrial production and machinery orders.