Business

Dollar drops to 15-year yen low

The US dollar has hit a fresh 15-year low against the yen after meetings of the International Monetary Fund (IMF) and G7 finance ministers produced little to ease world currency tensions.

The dollar weakened against a basket of currencies and fell as low as 81.37 yen, before recovering to 82.07.

Friday's weaker-than-expected US jobs data also raised expectations of more quantitative easing in the US.

The record low for the dollar is 79.75 yen, reached in April 1995.

Last month, the Japanese central bank stepped in to sell yen and buy dollars, in an attempt to weaken the value of the yen against the dollar.

A strong yen makes Japanese exports more expensive, and reduces profits when earnings are repatriated.

Although Japanese markets are closed for a public holiday on Monday, the dollar's slide put markets on alert for further potential intervention by the Bank of Japan.

Tensions

The IMF's member countries failed to agree on a concrete plan to tackle global imbalances at multilateral meetings over the weekend.

Japan escaped any overt criticism of its yen-selling policy, despite some commentators saying it was weakening its currency to gain an advantage in export markets.

And the dispute between the US and China over currency policy appears no closer to a resolution.

The US has accused China of keeping the yuan artificially low to benefit Chinese exports, and over the weekend US Treasury Secretary Timothy Geithner pressed Beijing again to let the value of the yuan rise against other currencies.

But Zhou Xiaochuan, the governor of China's central bank, while acknowledging that China must raise the value of its currency, said it would like to use "more gradual ways" to do so.

"In China, a lot of people believe in Chinese doctors. In western countries, they believe in western-trained doctors," he said.

Mr Zhou said the currency debate was like a contest between "pills that solve your problem overnight" and Chinese-style treatments of "10 herbs put together... that solve the problem not overnight, but maybe in one month or two months".

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