Investing.com - The dollar fell to its lowest levels in more than a year against the yen on Tuesday as a broad-based selloff in global equities continued into a second session, bolstering demand for the safe haven Japanese currency.
USD/JPY hit lows of 114.23, the weakest since November 2014 before pulling back to trade at 115.16, off 0.59% for the day.
The yen strengthened as Japan’s Nikkei closed down 5.4% overnight, the largest drop in three years amid mounting fears over the health of the global economy and the financial sector.
Concerns over the health of European banks prompted investors to sell financial stocks on Monday, sparking a rout in European and U.S. markets.
The euro edged lower against the dollar, with EUR/USD dipping 0.09% to 1.1185.
In the euro zone, data on Tuesday showed that German industrial output unexpectedly fell 1.2% in December, indicating that the region’s largest economy ended 2015 on a weak footing.
The single currency fell to two-week lows against the stronger yen, with EUR/JPY hitting lows of 128.26, before easing back to 128.95.
The yen’s gains came despite the Bank of Japan’s shock decision to adopt negative interest rates last month. Lower interest rates make a currency less attractive to yield-seeking investors.
The dollar also weakened against the Swiss franc, which tends to be bought by investors in times of risk aversion, with USD/CHF hitting two-month lows of 0.9824.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.14% at 96.63 not far from overnight lows of 96.33.