The New Nation - Internet Edition

AFP, Tokyo

The dollar slumped below the key 90 yen level yesterday for the first time in 13 years after a divided Senate failed to pass a rescue plan for ailing US automakers.

The greenback see-sawed against other currencies in volatile trading after hours of late-night negotiations among US senators on the bailout for the so-called Big Three automakers collapsed late Thursday.

The dollar dropped to 88.40 at one point, the lowest level since August 1995. In late Tokyo trade it was at 89.66, compared with 91.18 yen Thursday in New York.

The euro fell to 1.3370 dollars, down from a seven-week high of 1.3405 seen in New York, while the euro sank to 119.55 yen from 122.10.

"The collapse of talks on a bailout of the Big Three triggered a long-awaited attempt to break through the psychologically important 90 yen level," said Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.

Japanese officials fired a warning shot to currency traders, saying the yen was rising too quickly.

"The currency moves are excessive and I'm concerned about it," Naoyuki Shinohara, vice finance minister for international affairs, told reporters.

Finance Minister Shoichi Nakagawa said he was watching the currency markets with "great interest."

Japan's monetary authorities have not intervened since March 2004, allowing the yen to find its own level against the dollar.

Markets were widely expecting a plunge in November US retail sales due out later in the day, as consumption was hit by a jump in unemployment to 6.7 percent last month, the highest since 1974.

Traders were pricing in another big interest rate cut by the US Federal Reserve, anticipated when it meets next week.

There is speculation that the Fed could even slash rates by as much as 75 basis points to 0.25 percent, which would be even lower than Japan's rock- bottom official borrowing costs.

The dollar was mixed against Asian currencies, falling to 33.29 Taiwan dollars, down from 33.32 on Thursday, to 47.95 Philippine pesos from 47.96 and to 35.03 Thai baht from 35.18.

But the greenback rose to 1.4941 Singapore dollars from 1.4888, to 1,373.87 South Korean won from 1,342.80 and to 11,120 Indonesian rupiah from 11,100.