Yen soars on weak US economy news, euro woes

AP News
Posted: Oct 25, 2011 4:19 PM
Yen soars on weak US economy news, euro woes

The Japanese yen rose against other major currencies Tuesday after U.S. consumer sentiment weakened and talks on Europe's debt crisis appeared to break down.

The dollar fell to a record low against the yen after news that U.S. consumers' views of the economy are the worst since the middle of the Great Recession. The Conference Board's index of consumer sentiment was the worst since March 2009, far lower than analysts had expected.

The yen is considered safer than most currencies because it is less likely to lose value quickly, and because holders can use yen to invest in Japanese companies.

The dollar fell to 75.92 yen at 3:06 p.m. Eastern time from 76 late Monday. It touched a record low of 75.71 at 11 a.m.

The yen has benefited from recent signs that the U.S. economy is barely growing. Both the dollar and yen are considered safe compared to other currencies, so they tend to rise when markets are rattled and the economy weakens. When the U.S. economy shudders, the yen's appeal over the dollar increases.

The euro plunged against the yen after European finance ministers canceled a planned meeting ahead of a much-hyped summit about the debt crisis there. Leaders appear unable to agree on a set of measures aimed at propping up banks, bailing out Greece and preventing the contagion from spreading to larger countries.

Investors have been hoping that a plan to address the crisis would be unveiled at a summit on Wednesday. The plan originally was scheduled to be released on Sunday.

The euro fell to 105.71 yen from 106.1 late Monday. It sank as low as 105.25 just after 11 a.m.

In other trading, the euro fell to $1.3931 from $1.3951 late Monday. The pound rose to $1.6019 from $1.6002.

The dollar soared a percent against the Canadian dollar, to 1.0137 Canadian dollar from 1.0043.