Monday, March 3, 2008

Dollar falls to 3-year low against yen

The dollar plunged to a three-year low against the yen Monday in Asia on concerns about the state of the U.S. economy.

The dollar traded at 103.18 yen at midafternoon, down from 103.96 yen late Friday in New York. It fell earlier in the day to 102.92 yen, its lowest point since Jan. 28, 2005, when the greenback stood at 102.37 yen.

The euro, meanwhile, rose to $1.5215 from $1.5194.

The dollar began its descent last week after U.S. economic indicators, such as consumer sentiment data, were weaker than expected.

"The bottom line is that players think the U.S. economy may be entering, or already has entered, a recession," said Jun Kato, a senior dealer at Shinkin Central Bank.

Kato said even if the U.S. Federal Reserve cuts its rates further, that wouldn't help the U.S. economy and unit recover much.

"Long-term interest rates are still at high levels, meaning banks are reluctant to lend," he said. "If people can't borrow the money they need, the U.S. economy won't be able to pick up in the near term."

Finance Minister Fukushiro Nukaga told reporters that exchange rates are "moving on various economic indicators," adding that he didn't feel it was "appropriate" for him to comment on rate moves.

The yen's strength, which hurts Japan's exporters by making their products more expensive abroad, has also helped push Japanese stocks lower. The benchmark Nikkei 225 index fell 4.5% Monday.

The dollar was mostly higher against other Asian currencies. It rose 0.37% against the Philippine peso to 40.525 and gained 0.82% against the South Korean won to 946.6. The U.S. unit also rose 0.30% against the Taiwan dollar to 31.009.

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