Dollar falls to 15-year low vs. yen after key election makes Japanese intervention less likely

Dollar at 15-year low, under 83 yen after election

NEW YORK — The dollar fell to a new 15-year low versus the yen Tuesday after a key election made Japanese intervention to weaken its currency less likely, analysts said.

The dollar also fell below one Swiss franc, which investors are using as a safe-haven currency.

Both the yen and Swiss franc have surged against the dollar this summer after a string of weak data suggested that U.S. growth would slow sharply in the second half of the year.

In morning trading in New York, the dollar tumbled to 82.93 yen, the first time it has fallen below 83 yen since May 1995. The dollar broke under 84 yen for the first time since 1995 last month and has been hitting fresh 15-year lows since then.

The dollar later ticked up slightly to 83.01 yen. Late Monday, it was worth 83.63 yen.

Japanese Prime Minister Naoto Kan won a party election, beating challenger Ichiro Ozawa, who analysts said was considered more likely to prod the central bank into selling the yen so that its value would decrease. The government last intervened in currency markets in 2004.

“Obviously the market’s not buying the threat of intervention,” said Joseph Trevisani, chief market analyst of FXSolutions.

The dollar also slid as low as 0.9935 Swiss francs, falling below parity for the first time since December 2009. Parity means one dollar buys less than one Swiss franc. It’s rare for the dollar to be worth less than the Swiss currency. The dollar had traded below the franc for the first time in March 2008 and then for a few days in November and December 2009.

UBS analysts expect Switzerland’s central bank to raise the country’s interest rate by a quarter point on Thursday, even as the Swiss franc surges against the dollar and hovers near record highs versus the euro. A strengthening franc weighs on the profits of Switzerland’s exporters.

Higher interest rates tend to make a currency more attractive to investors searching for higher returns on their investments.

In other morning trading Tuesday, a better-than-expected report on retail sales weighed on the dollar versus currencies that are perceived as more risky. The euro jumped to a month high of $1.2996 from $1.2867 late Monday, while the British pound gained to $1.5516 from $1.5408. The dollar fell to 1.0229 Canadian dollars from 1.0271 Canadian dollars.