Dlr,Euro Hit Multi-Wk Low Vs Yen On Risk Aversion

The dollar and euro fell to their multi-week lows against the yen in Asia Tuesday
as a sharp fall in Japanese share prices increased players' demand for the safe-haven Japanese currency.

The dollar fell to Y95.11, its lowest level since June 1 and the euro dropped to Y131.60, a level unseen since May 26.

"Market sentiment recently has been dollar-bearish and today's sharp drop in Japanese stock prices prompted players to test the Y95-mark," said Shinichi Hayashi, a senior dealer at Shinkin Central Bank.

Japan's benchmark Nikkei 225 Stock Average closed 3.1% down at 9523.01 in the morning session - a three-week low. At 0505 GMT, the average stood at 9538.82.

Players are shying away from accumulating risk-sensitive units such as the euro, dealers said, because they believe risk-aversion movement may strengthen as market players correct their outlook on the U.S. and European economies toward a less optimistic side.

Investors are closely watching the two-day Federal Open Market Committee meeting which begins on Tuesday for clues on the fiscal health of the U.S.

"I'd like to pay attention particularly to the Fed's view of U.S. economic conditions and whether it announces a plan to increase Treasury purchases," Hayashi said.

As of 0450 GMT, the U.S. currency stood at Y95.28. If it falls below Y95.00, it could then drop at pace to Y94.50, said Yuji Saito, head of FX at Societe Generale.

Saito added the euro will likely keep falling because risk-aversion is the main theme of the market now. It declined against the dollar, to $1.3864 in Asia Tuesday from $1.3865 in New York overnight. Dealers said it may slip below Y131.50 and $1.3700 in this global day if stock prices in Europe plunge.