NEW YORK (Kyodo) -- The U.S. dollar briefly lost ground against the Japanese currency in New York on Friday to mark a postwar record low of 75.95 yen, breaching the previous record of 76.25 yen set five months ago, on concern over the U.S. and European economies.
The sharp rise in the yen is expected to prompt Japan's monetary authorities to consider taking measures such as intervening in the market to sell the yen as they did Aug. 4 and additional monetary easing measures in an effort to weaken the Japanese currency.
There is also concern the strong yen will deal a blow to Japan's exporters as the country struggles to recover from the March 11 earthquake and tsunami.
On Friday in New York, the dollar later recouped losses. At 5 p.m., it fetched 76.49-59 yen, compared with 76.47-49 yen at 5 p.m. Friday in Tokyo.
Remarks by Japan's top financial diplomat Takehiko Nakao that were taken to mean Japanese monetary authorities were hesitant to step into the market appeared to be behind the dollar's temporary plunge.
The vice finance minister for international affairs suggested in an interview with The Wall Street Journal on Friday that while the Japanese government would take appropriate actions when necessary, it has no plan to intervene frequently.
The dollar skidded after his remarks were quoted by Reuters news agency, which said the interview encouraged yen buying.
The credibility of the dollar has been challenged since the Aug. 5 historic downgrading of the United States' triple-A U.S. credit rating.
The Group of Seven (G-7) industrial economies subsequently issued a joint statement calling for a stable market but its impact was limited as it contained no specific steps such as possible concerted market intervention.
The U.S. currency has also come under pressures since the U.S. central bank on Aug. 9 announced it would maintain its effectively zero interest rate policy over an extended period. Some data released recently also pointed to a deteriorating U.S. economy.
The fiscal woes of the euroland, triggered by the Greek debt fiasco, that have been generating concern about Europe's financial systems and economies have also prompting a fund shift to the Japanese yen, market players said.
Recent gyrations of global stock markets are also seen as encouraging buying of the yen, regarded as a relatively safe currency.
"Amid speculation that the Federal Reserve Board may convene an urgent meeting shortly, investors, factoring in the possibility of another monetary easing step, sold the dollar," a dealer said.
New York stocks lost ground sharply Friday, sending the Dow Jones index down 1.57 percent, or 172.93 points, to finish at 10,817.65, on the heels of weak share prices in Asia. The tech-heavy Nasdaq Composit Index finished 1.62 percent or 38.59 points lower at 2,341.84.
The previous low of the dollar at 76.25 yen was posted March 17 in Sydney, just days after the March 11 earthquake and tsunami disaster hit Japan. The G-7 at that time took rarely seen concerted action to step into the market to weaken the yen.
On Aug. 4, the Japanese government intervened in the currency market on its own, while the Japanese central bank moved to further ease credit, pushing the dollar temporarily higher.
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