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. Last Updated: 07/27/2016

Yen Tumbles Hard After G7 Meeting

LONDON -- The yen fell against the dollar and traded close to a record low against the euro after the Group of Seven industrial nations stopped short of saying its weakness is a threat to the global economy.

The currency traded near a four-year low against the dollar as European officials at a meeting in Essen, Germany, failed to persuade the United States and Japan to call for it to strengthen. The yen also dropped against the British pound as investors in Japan, where the benchmark rate is 0.25 percent, sought higher-yielding assets overseas.

"The yen will probably, because of its interest-rate differentials, continue to be seen as a funding currency toward high-yielders,'' said Thanos Papasavvas, head of foreign exchange at London-based Investec Asset Management, which oversees $53 billion in assets.

Japan's currency dropped to 121.97 against the dollar Monday from 121.71 on Feb. 9 and close to a four-year low of 122.19 on Jan. 29.

The yen is the world's worst-performing currency in the past month as investors borrow cheaply in Japan and exchange funds for higher-yielding assets abroad, known as the carry trade.

Finance ministers and central bankers from the G7, in a communique released at the close of their meeting on Feb. 10, urged investors to recognize that Japan's economic recovery is "on track." The statement did not refer to the yen.

The yen's decline may be limited as European Central Bank President Jean-Claude Trichet told reporters after the meeting that the G7 still wanted to warn against making "one-way bets'' in the foreign-exchange market.