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TOKYO, Dec 5 (AFP): The yen hit a 32-month low against the dollar and sank to an all-time trough against the euro Monday as G7 powers including Japan appeared unfazed by the currency's decline at a weekend meeting, dealers said.
Contrary to reports ahead of the Group of Seven gathering in London, there was no specific discussion of the yen's recent slide, Japanese Finance Minister Sadakazu Tanigaki said.
Speaking on the sidelines of the two-day meeting of finance ministers and central bankers from the world's seven richest nations, Tanigaki said the yen's depreciation against the US currency merely reflected "current fundamentals".
With US Treasury Secretary John Snow also denying earlier reports he would raise the issue of the yen's weakness at the meeting, dealers took the comments as the green light to drive the Japanese unit down to new lows.
The dollar rose to 121.34 yen in Tokyo afternoon trade from 120.56 yen in New York late Friday, the highest since late March 2003.
The euro fell to 1.1693 dollars from 1.1716 dollars as a backdrop of rising US interest rates continued to support the US unit.
The euro also hit the highest level since its launch in 1999 against the Japanese unit, climbing to 141.91 yen. It later stood at 141.87 in late Tokyo trade, up from 141.30 in New York Friday.
"The dollar remains strong,"said Kikuko Takeda, currency analyst at Bank of Tokyo-Mitsubishi.
"Amid on-going interest rate differentials, the weaker yen was re-confirmed at the G7 meeting and the market is prone to sell the yen given lower interest rates in Japan," she said.
Saturday's G7 statement said that "exchange rates should reflect economic fundamentals (whilst) ... excess volatility and disorderly movements in exchange rates are undesirable for economic growth".
Analysts said the yen was likely to extend its losses against the dollar but just how far was still unclear.
The currency market showed little reaction to a firm performance by Tokyo share prices and the release of a quarterly survey by Japan's finance ministry showing strong growth in capital expenditure, dealers said.
"Judging from fundamentals ... including strong share prices and relatively positive economic data, the recent fall of the yen is apparently overdone," said Commerzbank currency watcher Ryohei Muramatsu.
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