The dollar fell to a seven month low against the Japanese yen on growing expectations of a recession in the United States.
Japan's government says it is deeply concerned about the rising yen. Since the terrorist attacks in the United States, the yen has climbed nearly five percent on the dollar. It rose as high as 115.83 on the U.S. currency, even though the country's central bank intervened (sold yen) in the market twice this week to help boost the dollar.
Frank Gong is an Asian currency strategist for the Bank of America. "For Japan, exports are a very import contributor to economic stability," he says. "The fact that domestic demand is weak means that they rely on exports. If the yen is too strong it will hurt their exports and their economy."
Analysts say the six-month mark for Japan's fiscal year on September 30 may also be encouraging a stronger yen. Japanese investors are sending overseas profits home to shore up their balance sheets, and purchasing yen in the process.
In Japan's stock market, shares fell for the second day to close the week. The market lost 2.7 percent on jitters over Washington's possible military retaliation for last week's terrorist attacks and on worries about the domestic economy.
The Bank of Japan says it is downgrading its view of the Japanese economy for the fourth month in a row. The report said that slowing exports are depressing domestic demand and expressed concern over the uncertain global economic outlook.
Toyota extended an eight session losing streak Friday, falling more than six percent on the day.
Elsewhere in Asia, markets finished the week in a slump. Hong Kong's Hang Seng fell 3.7 with banks and developers among the day's worst performers.
Singapore's Straits Times dropped almost five percent. Singapore Airlines was one of the session's biggest losers. The airline says it will have to curb its growth plans and may trim jobs as a result of the problems facing the global airline industry in the wake of the recent terrorist hijackings.
In Taiwan, stocks hit an eight-and-one-half-year low. Taiwan's weighted index fell almost three percent to close at 3,591. Technology stocks, such as Taiwan Semiconductor, finished with sharp losses, following movements of their U.S. counterparts.