Dollar, euro fall sharply against yen amid market turmoil

TOKYO, Aug 16, 2007 (AFP) – The dollar and euro fell sharply in Asian trade Thursday against the yen, sliding to four-month lows as investors ran for cover from turmoil on equity markets over US housing woes, dealers said. The stock market rout made investors shun risk and unwind their “carry trades” — borrowings in low-yielding currencies such as the yen that were meant for investment in regions with higher interest rates.

The dollar dropped to 116.16 in Tokyo morning trade from 116.60 in New York late Wednesday. It briefly slipped down to 115.98 yen, a five-month low.

The euro dipped to 1.3395 dollars from 1.3444 and to 155.58 yen from 156.79, also a four-month low.

Asian stock markets were being battered again Thursday after an overnight fall on Wall Street triggered by anxiety about default housing loans in the United States which had been issued to customers with patchy credit histories.

“Market confidence is shrinking with players unable to calm down. The depth of the problem remains difficult to assess and so risk-unwinding and aversion are expected to continue,” said Kazuhiko Shibata, manager at Dresdner Bank’s Tokyo branch.

The Japanese currency also continued to strengthen against high-y