U.S. Dollar Falls Below 100 Yen for 1st Time in 12 Years

The dollar dipped below 100 yen for the first time in 12 years Thursday amid growing worries about a U.S. economic slowdown and expectations for lower U.S. interest rates.

The dollar fell as low as 99.75 yen, according to Thomson Financial, before bouncing back above 100 yen. It was the first time the Japanese currency had traded below 100 yen since November 1995.

The U.S. currency has been declining recently on growing speculation that the Federal Reserve will cut interest rates further to shore up the sagging American economy and calm jittery financial markets.

Weakness in the dollar is likely to hurt the profits of Japanese exporters by making their products more expensive abroad and eroding the value of its overseas earnings.

Players ranging from hedge funds to bankers to Japanese exporters have been selling the dollar.

The dollar has fallen so quickly in recent days that Japan's finance minister warned the markets against causing "excessive" moves in the dollar-yen rate — language that indicates increasing concern about the strong yen's drag on the Japanese economy.

"It's also a shared perception among the (Group of Seven leading industrialized nations) that excessive exchange rate moves are undesirable," Finance Minister Fukushiro Nukaga told reporters.

Satoshi Okagawa, head of foreign exchange forward trading group at Sumitomo Mitsui Banking Corp., said the dollar could continue its drop to 95 yen.