Dollar Dips Against Yen in Asia

The U.S. dollar briefly dropped as low as 109.87 yen, compared with 110.39 yen late Thursday in New York. Speculators and fund managers were selling the greenback as they closed out holdings and settled accounts.

The dollar rebounded to 110.17 yen by midafternoon. The euro rose to $1.4616 from $1.4612.

After the Dow Jones industrial average fell overnight, Japan's benchmark Nikkei 225 index followed suit. This and accumulating news about subprime-related write-downs at major banks fueled risk aversion among currency players, traders said.

"The dollar may be supported around 109.80 yen for now, but if stock markets in Europe and the U.S. fall again and risk reduction moves accelerate, the dollar could fall much further," said Akio Shimizu, senior dealer at Mitsubishi UFJ Trust & Banking.

Mamoru Arai, a senior vice president of foreign exchange at Mizuho Corporate Bank, said few players wanted to buy the dollar.

"The recent bulging write-downs of subprime losses by U.S. financial institutions show that the profits they make in other businesses are beginning to be unable to absorb the losses," Arai said. "Fears of a subprime-triggered credit crunch are getting real."

Under the circumstances, the dollar may test the 109-yen level in the near term, Arai said.

Market participants are waiting to see October U.S. industrial production figures, due out later Friday, and their impact on stocks. Economists polled by Dow Jones Newswires expected the data to show a 0.1 percent rise.

Against other regional currencies, the dollar was mostly higher. It rose to 7.7836 Hong Kong dollars from 7.7832 the previous day, and to 9,345 Indonesian rupiah from 9,312. It dropped against the Singapore dollar to 1.4528 from 1.4533.