The Japanese yen rose against major currencies on Monday as a selloff in Asian and European stock markets led to more unwinding of yen carry trades. Trading volume was also relatively thin due to the Martin Luther King Jr. holiday in the U.S.

Concerns that U.S. President George W. Bush's stimulus package of up to US$150 billion will not be enough to help a U.S economy deemed close to, or already in recession spread over into Asian and European bourses on Monday, with some stock markets declining almost 6%. Traders continued to take profit on carry trades on risk aversion, which also led to the yield on two-year eurozone bond falling more than 10 basis points.

Last week's release of weak U.S. retails sales n housing data pressured the dollar and the greenback fell to a new 2 & 1/2 year of 105.67 against the yen. Weaker-than-expected German PPI data (-0.1% versus the forecast of a 0.2% rise) also weighed on the euro, with the single currency falling to a 5-month low of 152.84 against the yen.