NEW YORK: The dollar tumbled to a nearly four-month low on Tuesday as growing fears of a global slowdown pushed investors to safe-haven currencies like the Japanese yen and Swiss franc.
Even with Chinese markets closed for the Lunar New Year holiday and oil flat on the day, risk appetite waned. A selloff in major stock markets worldwide and increased worries about Europe's banking sector also shook confidence in the dollar, which has moved in line with risky assets so far this year.
With scant data released during the U.S. session, the dollar seemed to be following its Monday path downward.
"Markets were very risk-averse out of the gate this week, and it's continued today," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.
Wall Street equities were slightly higher, having recovered from an early selloff.
The dollar index, which measures the greenback against a basket of world currencies, fell below 96 for the first time since October. It was last down 0.55 percent at 96.046.
The yen was again in the limelight on Tuesday, having gained more than 5 percent against the dollar since the start of February.
The Japanese currency rose to its highest against the dollar since November 2014, with the dollar dropping as low as 114.205 yen in Asian trade.
The dollar was last at 115.10 yen, down 0.7 percent.
The flight to safety also pushed the yield on the benchmark 10-year Japanese government bond negative for the first time, sending it as low as minus 0.035 percent.
The dollar fell to its lowest since mid-October against the Swiss franc, trading as low as 0.9715 francs and down more than 1.5 percent on the day.
Both the yen and franc perform well in times of financial turmoil since they are often used to fund trades of more risky assets because of their low interest rates. When investors reverse those risky bets, they buy back the currencies.
The euro also rose against the dollar to $1.1299, its highest since Oct. 22. It was last up 0.6 percent at $1.1262.
The euro, franc and other European currencies had fallen by more than 1 percent against the dollar on Oct. 22 after comments by European Central Bank President Mario Draghi signaled that new stimulus measures were likely.
Among emerging currencies, Mexico's peso continued to sag, touching a historic low of 18.935 pesos to the dollar on worries that weak global demand will hurt its growth.
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