Tokyo: The dollar tumbled to 14-year low against the Japanese yen on Thursday after indications US interest rates will remain low and that the Federal Reserve isn’t overly concerned about the dollar’s slide.
The dollar sank to 86.51 yen in Tokyo trading, the lowest since July 1995.
Analysts said some investors were selling the dollar to buy gold, which surged to another record on Thursday.
Japan’s finance minister Hirohisa Fujii said Japan “will take appropriate steps if foreign exchange rates move abnormally.”
A strong yen is generally seen as bad for Japan’s economy because it erodes overseas income for the country’s big auto and electronics exporters.
Panasonic Corp. president Fumio Ohtsubo described the yen’s appreciation as “very severe” to reporters, saying it was an added blow given the already weak state of the economy.
The dollar has also been falling against the 16-nation euro, which rose to a 15-month high on Wednesday. It eased to $1.5114 on Thursday from $1.5132 late Wednesday.
The renewed slump in the dollar was driven largely by the publication on Tuesday of the minutes to the Fed’s last rate-setting meeting on 3-4 November.
The Fed said at the time 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%, and that the fall in the dollar had been “orderly.”
Currency traders seized on the reference to the dollar as the Fed is usually wary of talking about changes in currency values.
Interest rate differences are likely to drive further dollar losses, analysts say. The US interest rate is among the lowest in the world.