Dollar weakened against Japanese Yen

Dollar weakened against Japanese Yen

The Dollar weakened against the Japanese Yen yesterday after investors flocked to find safe havens from the ongoing Euro crisis.

The dollar weakened to 78.73 yen, its lowest level since February 17th when it hit the 78.53 mark. The rise of the yen, which reached historic highs against the dollar last year, prompted fresh concern Thursday from Japan’s finance minister, who has previously warned about further market interventions to tame the unit’s value.

“This is not reflecting the state of Japan’s economy. It’s a little speculative,” Jun Azumi said, as official data released Thursday showed anaemic factory output growth of just 0.2 per cent for April.

Dealers are flocking to currencies seen as safe-haven investments, particularly the yen, as eurozone fears sent Spanish and Italian bond yields higher.

“As the European situation is growing increasingly severe, it’s likely that yen-buying pressure will increase,” Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ, told Dow Jones Newswires.

All eyes are now focused on Spain after confidence in the struggling nation’s government reached all time lows. Many observers believe that it is now just a matter of time before the European central bank will have to step in and provide a bailout. The country is desperately battling to contain fears of an imminent financial collapse and is scrambling to fund its debt ridden banks. Its debt premium has shot to a euro-era record.

"Spain is going through a major crisis of confidence," one diplomat said. "Markets are good at pricing risk but they hate uncertainty - and right now that uncertainty is killing Spain."

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