Dollar hits three-year low against yen

3 Mar, 2008, 0738 hrs IST, AGENCIES

TOKYO: The dollar slumped to a three-year low against the yen in Asian trade on Monday on growing fears that the US economy is slipping into recession, dealers said.

The dollar was bid as low as 102.92 yen in early Tokyo trade, the lowest level since January 2005.

The greenback later recovered slightly to 103.04 yen by mid-morning, down from 103.73 on Friday in New York.

The dollar has been battered over the past week on growing fears for the health of the world's biggest economy and expectations of further interest rate cuts by the US Federal Reserve.

A weak earnings report from insurer American International Group (AIG) sparked fresh jitters about the fallout from credit market problems, dealers said.

"The anxiety about the credit crisis is becoming even stronger than before," said Ryohei Muramatsu of Commerzbank in Tokyo.

"Furthermore, the market now feels that a weak dollar no longer bothers the Fed. Although all trading leads point to continued weakness of the dollar, it may take more time before the dollar tests the 100 yen level," Muramatsu said.