Dollar hits 14-year low against yen

The dollar slumped to a 14-year low point against the yen on Thursday, prompting fears that a further surge could hurt a fragile recovery in Japan, the world's second largest economy.
Gold scored yet another record high, breaching 1,195 dollars an ounce as the US currency waned.

During Asian trading, the dollar slid to 86.28 yen, the lowest level since July 1995.

In later European deals, the dollar stood at 86.64 yen compared with 87.38 yen late on Wednesday in New York. The euro fell to 1.5085 dollars from 1.5127 dollars late Wednesday.
Responding to the yen's surge, Japan's Prime Minister Yukio Hatoyama said his government must take measures to avoid a double-dip recession.

"We must take measures so that the economy will not fall into a double-dip" recession, said Hatoyama, without specifying what measures his government may take to boost the world's second largest economy.

The premier stressed that "rapid and drastic movements in foreign exchange are not desirable" but added that the day's fluctuations were due mainly to the fall of the dollar rather than a rise of the yen.

A stronger yen threatens the competitiveness of Japanese exporters, while Asia's biggest economy sank into its worst post-war recession in the second quarter of 2008 as the economic downturn hammered demand for its cars, electronics. Japan's economy has meanwhile gradually rebounded this year.

The dollar's fall was driven by expectations that the US Federal Reserve would maintain its ultra-low interest rates for some time, sending investors in search of other higher-yielding assets, dealers said.

"This yen strengthening is caused by dollar selling rather than yen buying, so this is not something Japan can handle by itself," said Mizuho Securities senior technical analyst Yutaka Miura.

"This trend will continue unless the Japanese government takes action, in cooperation with the US."

In London on Thursday, the euro was changing hands at 1.5085 dollars against 1.5127 dollars late on Wednesday, at 130.70 yen (132.21), 0.9117 pounds (0.9056) and 1.5086 Swiss francs (1.5080).

The dollar stood at 86.64 yen (87.38) and 1.0001 Swiss francs (0.9965).

The pound was at 1.6646 dollars (1.6703).

On the London Bullion Market, the price of gold rose to 1,183.13 dollars an ounce from 1,179.75 dollars an ounce late on Wednesday. Earlier Thursday it had struck a record high at 1,195.13 dollars an ounce.
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