Dollar falls below 80 yen, near postwar low

The dollar has fallen to a 15-year low - briefly touching below 80 yen - amid the nuclear crisis in Japan, debt woes in Europe, tension in the Middle East and weak economic reports at home.

The dollar is close to its lowest point of the post-World War II era: 79.75 yen struck in April 1995. Analysts have said they expect the Bank of Japan to try to weaken the yen if the dollar drops below 80 yen. A strong yen hurts the Asian country's exporters.

Leaks of radioactivity from a stricken Japanese nuclear plant have deepened the Asian country's crisis following last week's massive earthquake and tsunami. The yen is climbing as investors expect the Japanese to close down overseas bets and bring their money home.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

The dollar traded near its lowest point of the post-World War II era against the yen Wednesday amid nuclear troubles in Japan, debt woes in Europe, tension in the Middle East and weak economic reports at home.

In late morning trading in New York, the dollar slid to 80.45 Japanese yen from 80.83 yen, closing in on its post-war low of 79.75 yen struck in 1995. It sank to as low as 80.28 yen Wednesday, its weakest level since a 15-year low of 80.25 yen reached in November 2010.

Leaks of radioactivity from a stricken Japanese nuclear plant continued, deepening the Asian country's crisis following last week's massive earthquake and tsunami.

Despite the devastation and intensifying nuclear threat in Japan, the yen has been rising. That's in part because the yen is a traditional safe-haven currency, benefiting during periods of international turmoil. Also, market trackers expect Japanese investors to close down overseas bets and bring their money home, which is driving the yen higher.

The yen's climb poses a threat to its weakened economy, because a stronger currency cuts its exporters' profits. Analysts have said that they expect the Bank of Japan to try to weaken the yen if the dollar drops below 80 yen.

"The Bank of Japan's likely to intervene if they need to," said Brown Brothers Harriman analyst Mark McCormick. Japan last intervened in foreign exchange markets to weaken its currency in September 2010.

Meanwhile, the euro dropped to $1.3920 from $1.4000 and the British pound fell to $1.6040 from $1.6092 amid tensions from elsewhere around the globe.

Portugal raised $1.4 billion in a debt auction Wednesday, but the indebted country had to pay higher interest rates to investors a day after Moody's downgraded its credit rating, refocusing some attention on Europe's debt crisis.

In the Middle East, soldiers and police cracked down on hundreds of protesters in Bahrain, a neighbor of Saudi Arabia, the world's biggest producer of oil. If upheaval spills into Saudi Arabia, oil production could be greatly affected. A Saudi-led force is already in Bahrain, and analysts fear tensions between Saudi Arabia and its Shiite rival Iran, another major oil producer. Iranian President Mahmoud Ahmadinejad on Wednesday denounced the Bahraini government's moves and the Saudi-led forces in Bahrain.

There were also negative signals for the U.S. economy Wednesday in government reports.

The Labor Department said producer prices in the U.S. posted the steepest rise last month since June 2009 because of climbing food and energy prices. But apart from those, inflation remained muted in February, suggesting the Federal Reserve isn't likely to raise interest rates any time soon.

Higher rates, used to fight inflation, tend to support a currency.

Another government report on housing indicated that the real estate market was a long way from a recovery, weighing on the broader economy. Home construction dropped 22.5 percent in February from January to a seasonally adjusted 479,000 homes last month. That's the lowest level since April 2009 and the second-lowest on record. Permits to start new projects fell to the lowest level on records going back to 1960.

"With core (producer prices) inflation still low and the economic recovery constrained by the continued weakness in housing, the Fed is not going to respond by tightening policy," wrote Paul Ashworth, an economist with research firm Capital Economics, in a research note.

The Fed on Tuesday remained committed to seeing its $600 billion bond-buying program through June, which is meant to lower long-term interest rates, and reiterated that it would hold the key U.S. interest rate near zero for an "extended period."

In other trading Wednesday, the dollar rose to 98.98 Canadian cents from 98.24 Canadian cents but fell to 0.9146 Swiss franc from 0.9175 Swiss franc, after setting a new record low of 0.9129 Swiss franc earlier in the day.