Dollar crashes to 15-year low against Japanese yen

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The dollar fell as low as 84.17 yen today, the lowest since 1995, before recovering slightly to 84.47 yen.

Its slide erodes the overseas earnings of Japanese exporters, as each time the value of the currency rises, goods become more expensive to overseas buyers.

The yen's sharp rise may increase the chance of action from the Bank of Japan ahead of its rates review next month. A source said the central bank could be pushed into easing monetary policy: "The mood isn't good. Things have changed somewhat from yesterday."

Traders have been sceptical that Japanese authorities will intervene in currency markets to reverse the dollar's slide.

Japan's finance minister, Yoshihiko Noda, said the government was watching the situation closely. "Obviously, it's an one-sided movement," he said. "We will monitor the market movement extremely closely with grave concern."

But the markets took his refusal to comment on the chance for intervention as a sign the authorities were not yet ready to back up words with action.

"These are non-comments from Noda," said Paul Robson, currency strategist at RBS Global Banking in the City.

"The market will test the Japanese authorities to intervene and unless they come up with something more definitive, dollar/yen is headed towards 80. This will really hurt the Japanese economy since both the US and Asian economies are also slowing down."

The dollar's fall comes amid concerns about weakness in the US economy, which has dragged down stock markets worldwide.