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Dollar at 15-year low against the yen

Associated Press / August 12, 2010

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NEW YORK — The dollar tumbled to a 15-year low versus the Japanese yen after the Federal Reserve said it expected a weaker US recovery and took steps to support the economy.

The dollar surged against most other currencies around the world, however, with investors still seeking access to one of the world’s favorite places to park funds: short-term US Treasurys.

The euro, which is used by 16 European countries, fell below $1.30 for the first time this month. In late New York trading, it was worth $1.2882,compared with $1.3196 late Tuesday.

The British pound receded to $1.5672, from $1.5881.

Yields on US government debt tumbled as investors poured into Treasurys, which they consider super-safe.

The dollar had its biggest one-day jump against a basket of six major currencies — euro, pound, yen, Swiss franc, Canadian dollar, and Swedish krona — since December 2008, according to data from Thomson Reuters. The index rose nearly 2 percent yesterday.

The Fed on Tuesday said it would take money from maturing mortgage-backed bonds and place it in Treasurys as it cut its assessment of the economy’s prospects. The central bank hopes to pull long-term interest rates modestly lower, making borrowing easier and stimulating economic activity.

The Fed’s action underscores the weaker growth in the United States this summer, which has helped take the luster off the US dollar as the world’s first choice for a safe-haven asset.