Dollar tumbles to 15-year low versus yen
NEW YORK (AP) — The dollar tumbled to a 15-year low against the yen Tuesday as worries about a slowdown in the global economy boosted currencies seen as safer bets.
The dollar fell below 84 yen for the first time since 1995 and also lost ground against the Swiss franc.
Investors have traditionally seen the dollar as a safe haven, but its appeal has been tarnished as expectations for U.S. growth weakened this summer. The dollar ended stronger Tuesday against most other major currencies, but traded below the day’s highs after the midmorning release of a weak report on the U.S. housing market.
“Global growth is undoubtedly faltering and the outlooks for the major advanced economies are pretty poor,” said Julian Jessop, chief international economist with Capital Economics in London.
With uncertainty about the strength of the recovery dominating sentiment, investments considered safer, such as gold and U.S. Treasurys, are also benefiting. Stocks fell.
A report from the National Association of Realtors brought new concerns about the economy. The trade group reported that U.S. home sales plunged 27 percent in July to the lowest level in 15 years.
The dollar fell as low as 83.61 yen Tuesday, its weakest level since June 1995, before recovering slightly to 84.23 in late trading. On Monday the dollar was worth 85.28 yen.
The dollar fell to 1.0303 Swiss francs from 1.0394 francs.
“The market is very sensitive to negative economic data right now, which is expected to continue feeding into safe haven currencies,” said Michael Woolfolk, senior currency strategist at Bank of New York Mellon.
The euro also hit a record low versus the franc Tuesday at 1.3050 francs. It also fell to its lowest point versus the yen since 2001 at 105.45 yen.
The strengthening yen is becoming a problem for Japan’s exporters, because it weighs on earnings and makes their products less competitive compared to goods from other countries.
The U.S. currency lost some ground against other currencies after the housing report, but largely managed to hold above late Monday’s prices.
The British pound traded at $1.5442 from $1.5535 late Monday, while the U.S. currency dropped from above 1.0660 Canadian dollars earlier Tuesday to 1.0600 Canadian dollars in late trading. Late Monday, the dollar was worth 1.0514 Canadian dollars.
The dollar also pared its gains versus the Australian and New Zealand dollars, the Mexican peso, and the Brazilian real, as well as the Scandinavian currencies.
The euro was nearly flat at $1.2673 versus $1.2682 late Monday. The dollar had been stronger against the euro before the report was released.