THE US dollar fell to a 15-year low against the yen yesterday in the first day of trading after the G20 meeting of finance ministers in South Korea agreed to avoid a currency war that could derail the global economic recovery.
The meeting however failed to convince traders who continued to sell the dollar while commodity prices rose.
The US dollar traded at 80.86 yen yesterday having fallen as low as 80.41 yen – the weakest level since April 1995.
Below that, the dollar would be at its weakest since the yen was allowed to float freely in the 70’s.
At the weekend meeting ministers agreed to avoid devaluing their currencies to gain competitive advantage, although they failed to adopt concrete targets to address trade imbalances.
The G-20’s joint communiqué didn’t have enough teeth to trump worries that the US Federal Reserve will soon announce a huge quantitative-easing program, which will weaken the value of the dollar.
With a weakend US dollar investors pumped money into commodities, with mining stocks gaining ground.