The dollar fell sharply against the yen in Asian trading Wednesday as non-Japanese investors sold the U.S. currency to lock in profits amid expectations that subprime mortgage woes will continue to weigh on U.S. shares.
The U.S. dollar was trading at 117.94 yen Wednesday afternoon, down from 119.30 yen late Tuesday in New York.
"Concerns over U.S. stock falls triggered by a credit crunch will likely remain deeply rooted in the financial markets," said Osao Izuka, head of foreign-exchange trading at Sumitomo Trust & Banking. "Under such circumstances, it's difficult (for investors) to buy the dollar."
Wall Street fell Tuesday after American Home Mortgage Investment Corp. said it is facing serious liquidity issues amid a flood of margin calls from lenders and has hired advisers to evaluate its options, including the liquidation of its assets.
The news pushed the Dow Jones industrial average down 1.1 percent, and that in turn sent Japanese and Asian shares tumbling. The Nikkei 225 index fell 2.2 percent to its lowest in four-and-a-half months.
In other trading, the euro sank to US$1.3648 from US$1.3703.
Against other Asian currencies, the dollar was higher. It rose 0.81 percent against Indonesian rupiah to 9,300 and 0.79 percent against Indian rupee to 40.502.