Topic: Japanese Yen

The euro hit a near two-year low against the dollar on Thursday after dire German economic data suggested no country in the region was immune from crisis, alarming investors already fretting over the risk that Greece will leave the euro zone.

With Japan awash in cheap funding provided by domestic savings and local banks continuing to park their cash in government bonds, analysts tell CNBC the country faces no urgency in dealing with its rising public debt, despite the latest ratings cut by Fitch.

The euro slumped to its weakest level against the dollar in nearly two years on Wednesday on doubts a meeting of European leaders would calm fears of a disorderly Greek exit from the euro zone.

Japan's exports rose in April from a year before at the fastest pace in more than a year, helped by a recovery in overseas demand.

The Bank of Japan kept monetary policy steady on Wednesday, preferring to save its ammunition as Europe's deepening debt crisis may warrant further action in the coming months to fend off damage to the fragile economy.

Japan's sovereign rating was cut by one notch by Fitch on Tuesday as a political stalemate dims the chance that the country can curb its snowballing debt.

Japan was the world's major creditor in 2011, for the 21st consecutive year, reflecting corporations' aggressive foreign acquisitions and Japan's prodigious foreign currency intervention.

The euro fell on Tuesday as skepticism grew that an informal meeting of European leaders would yield much progress in tackling the debt crisis, with worries about Greek politics and Spanish banking problems expected to keep the currency weak.

The euro edged higher against the U.S. dollar on Monday as traders paused after driving the common currency to a four-month low and awaited a meeting of euro zone leaders this week.

"If the currency is not going to exist, it shouldn't be at $1.27," one strategist said, referring to the euro's exchange rate versus the U.S. dollar.

The euro climbed to its session high against the dollar on Friday as investors position ahead of a weekend meeting of leaders of the G8 major industrial economies after weeks of losses on ongoing concerns about Greece and instability in the Spanish banking system.

The dollar will gain against the euro, pound and yen, Max Knudsen, Chief Market Strategist at ADS Securities, Abu Dhabi, told CNBC, as investors take the opportunity to sell the euro on any improvement and as sterling ends its recent climb.

Japan, the country synonymous with debt and deflation in recent years, posted the best growth rate among major industrialized nations in the first quarter and some analysts are predicting more upside for the economy from domestic demand.  

The euro held above a four-month low on Thursday, taking a breather from a sharp sell-off, although it was vulnerable to a further slide due to worries about the solvency of some Greek banks and fears the country may exit the euro zone.

The euro hovered near a fourth-month low against the U.S. dollar on Wednesday and more losses could be in store as investors feared a Greek exit from the euro zone that could result in other peripheral countries following suit.