Dollar falls versus yen after earthquake in Japan

AP News
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Posted: Apr 07, 2011 4:12 PM
Dollar falls versus yen after earthquake in Japan

The dollar fell against the yen after another powerful earthquake hit northern Japan.

The 7.4 magnitude earthquake triggered tsunami warnings but they were later lifted. Northern Japan was devastated by an earthquake and tsunami last month.

The dollar fell to 84.92 Japanese yen late Thursday from 85.47 yen late Wednesday.

The Japanese yen is considered a safe-haven currency and tends to get stronger during times of turmoil. Days after the March 11 earthquake and tsunami which damaged a nuclear plant, the yen reached a record high against the dollar.

Elsewhere, the euro slipped against the dollar after the European Central Bank raised its key interest rate to 1.25 percent from 1 percent. ECB President Jean-Claude Trichet said the rate hike was not the first of a series as investors were hoping. The rate hike Thursday was widely expected.

"We did not decide that it was the first of a serious of rate increase," Trichet said. "We always do what is necessary to deliver price stability."

The euro fell to $1.4302 from $1.4336 late Wednesday. Trading earlier in the day was volatile, with the euro rising over $1.43 before and after the central bank announcement. It fell below the $1.43 mark after Trichet's comments.

"I think the market was looking for something more hawkish," said Chris Walker, currency strategist at UBS AG in London.

"He didn't use the word vigilance" as he did in past speeches, Walker added.

Meanwhile, the market shrugged off Wednesday's news that Portugal would seek a bailout as Greece and Ireland did last year. Walker said that investors expected that the country would need a bailout and it was already reflected in market prices.

The dollar traded mixed against other currencies around the world Thursday. The British pound fell to $1.6315 from $1.6332 late Wednesday. The U.S. currency fell to 95.90 Canadian cents from 95.93 Canadian cents and fell to 0.9163 Swiss franc from 0.9192 Swiss franc.