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Yen declines amid worries on Japan economy

By Agencies

The yen fell across the board, sending the dollar to a three-month high, as investors who had bet the Japanese currency would push back up towards recent peaks were forced to cut loss-making positions.

The yen, which until recently tended to gain as a safety bid when stock markets tumbled, dropped against the pound, euro and Australian dollar even as Japan's Nikkei share average fell, edging close to its lowest levels in 26 years.

All three have hit either record or multi-year lows against the Japanese currency in the past four months but then edged steadily higher in February.

Investors previously saw the yen as a place to shelter in the financial storm, but the currency has lost some of its allure recently as Japan has suffered a more severe economic contraction than many other countries.

Japan's currency also approached the weakest level in a month versus the euro after Prime Minister Taro Aso's approval rating slumped 6.8 percentage points to 11.4 per cent in a survey published yesterday.

The dollar rose 0.7 per cent to 95.28 yen, triggering buy orders around 94.60 and 95 and tripping up traders who had expected the yen to gain. The ICE's Dollar Index, which tracks the greenback against six major trading partners including the euro and the yen, dropped 0.2 per cent to 87.075. It reached 88.254 on February 18, the highest level since November 21.