Dollar falls to new 15-year low vs. yen

The US dollar fell to a fresh 15-year low against the Japanese yen as investors flocked to safe haven assets amid persistent worries that the global economic rebound could be losing steam. The dollar eased to the lower 83-yen level, and set a fresh 15-year low of ¥83.34 before recovering. Japan's finance minister Yoshihiko Noda said that the government stands ready to take steps against the rising yen, if necessary, and that the steps could include exchange market intervention. Separately, the Bank of Japan Governor Masaaki Shirakawa said today that the central bank is prepared to announce additional quantitative easing measures if economic conditions deteriorate.



The euro was on the defensive after renewed fears about the euro-zone banking system drove it to all-time lows against the Swiss franc and Australian dollar, hitting financial stocks and dragging equity markets in Europe and the US lower. The Wall Street Journal (WSJ) reported that some major banks in the debt-strapped euro-zone had understated holdings in potentially risky government debt during "stress tests" designed to test their ability to weather crises.

Ireland added to the jittery mood, extending its guarantees for short-term bank liabilities amid fears over the escalating cost of bailing out nationalised lender Anglo Irish. Worries about Ireland were in part sparked by the rising cost of bailing out Anglo Irish Bank. Those fears pushed Irish government bond yields to record levels. The Irish government said it will split nationalized lender Anglo Irish Bank into two separate businesses in an effort to minimize the cost to taxpayers of bailing out the failed firm. Greece was also in focus after the National Bank of Greece said late that it will raise 2.8 billion euros of fresh capital.

The euro suffered after the German Banking Association said that the country’s 10 biggest lenders may need another €105bn of additional capital. Germany's Die Zeit reported late that banks could be required to hold a Tier 1 capital level of 9% under new rules dubbed Basel III, potentially rising to 12% in boom
years in order to build reserves to pay for a downturn. The Federal Association of German Banks had estimated that the country's ten largest lenders could need as much as 105 billion euros (US$135bn) of extra capital under planned Basel rules.