The yen struck an eight-month high point against the dollar on Monday as exporters repatriated overseas earnings and Japan insisted that it would not intervene to weaken its currency.
A woman walks past a foreign exchange bank in Seoul. The yen has struck an eight-month high point against the dollar as exporters repatriated overseas earnings and Japan insisted that it would not intervene to weaken its currency.
The dollar sank as low as 88.25 yen, the weakest since late January. In late morning London trade it stood at 89.49 yen, down from 89.60 in New York on Friday.
The European single currency fell to 130.90 yen from 131.64, and to 1.4627 dollars from 1.4686, as also traders digested the re-election of Angela Merkel as German chancellor.
The pound continued to suffer after Bank of England governor Mervyn King had said last week that the currency's weakness was "helpful" for rebalancing the British economy.
Sterling sank on Monday as low as 1.0752 against the euro, a level last seen in December.
Markets were looking ahead to US data including personal income and spending figures on Thursday as well as a key monthly jobs report on Friday.
On Monday, Japanese Finance Minister Hirohisa Fujii reiterated that the new government was not considering a foray into the market to sell the yen and help exporters.
"The recent dollar trend (against the yen) is not abnormal," he said.
It would be a "mistake" to artificially weaken the yen to defend exporters, he added, restating the new government's view that a stronger yen would boost consumption at home thanks to cheaper imports.
His remarks gave dealers "the green light" to sell the dollar for yen, Mizuho Corporate Bank senior dealer Yuichiro Harada told Dow Jones Newswires.
Fujii, however, later appeared to backtrack somewhat, saying the yen's rise was slightly "one-sided" and that stable currency rates were desirable.
Even so, analysts said the dollar could drop below its January low of 87.10 yen, piling additional pressure on Japanese exporters.
"Without intervention to weaken the yen and with US yields so low, it's hard to see what will produce a reversal in the dollar/yen trend in the near-term," said NAB Capital analyst John Kyriakopoulos.
The euro meanwhile fell as drops on Asian stock markets reduced investor appetite for riskier assets and growth-sensitive currencies, dealers said.
Traders were looking ahead to US data including personal income and spending figures on Thursday as well as a key monthly jobs report on Friday.
In London on Monday, the euro was changing hands at 1.4627 dollars against 1.4686 dollars late on Friday, at 130.90 yen (131.64), 0.9197 pounds (0.9210) and 1.5107 Swiss francs (1.5091).
The dollar stood at 89.49 yen (89.60) and 1.0329 Swiss francs (1.0270).
The pound was at 1.5905 dollars (1.5951).
On the London Bullion Market, the price of gold eased to 990 dollars an ounce from 991.50 dollars an ounce late on Friday.
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