Tokyo - The yen and the dollar rose on Monday and the Mexican peso fell on concern about the spread of swine flu, which has killed 103 people in Mexico and infected people in the United States and Canada.
The World Health Organisation declared the flu a "public health emergency of international concern" that could become a global outbreak of serious disease.
The Mexican peso fell 2% against the dollar in Asian trade, although Mexican Finance Minister Agustin Carstens tried to reassure markets, saying the impact on the economy would be "transitory".
The dollar fell to its lowest in a month against the Japanese currency but climbed against the Australian and New Zealand dollars and against the euro.
Analysts said investors were unwinding positions in currencies such as that of New Zealand, where a teacher was being treated for flu-like symptoms, and were cautious about the economic impact on travel and transport.
"Swine flu is centre stage. The Aussie and kiwi are hit hard. There is general risk aversion with concerns about the possible spread to other countries," said Masafumi Yamamoto, head of FX strategy Japan at Royal Bank of Scotland.
The peso weakened past 13.60 per dollar from a close of 13.284 pesos on Friday and Yamamoto said it would face further pressure later in the day when US trading begins.
The dollar fell to ¥96.62, its lowest in a month, before edging back to ¥96.75, down 0.4% on the day. But it rose 0.4% against a basket of currencies to 85.071.
Risk and rates
The Australian dollar fell 1.3% to $0.7135.
Australia said it would strengthen its border surveillance for swine flu.
Takahide Nagasaki, chief FX strategist at Daiwa Securities SMBC in Tokyo, said the market needed to see the extent of the outbreak and its overall impact before any judgments could be made on the broader market effect.
"What needs to be watched going forward is the kind of impact the outbreak will have on North American trade and the movement of people," Nagasaki said.
The New Zealand dollar lost 1.2% to $0.5650, pressured both by swine flu worries and caution ahead of a rate decision from the central bank on Thursday.
The central bank is expected to cut its rates to a record low of 2.5% this week and signal that rates will not be raised for a while.
The Aussie fell more than 1% versus the yen and the kiwi dropped 0.6% to ¥54.66.
The euro fell 1% to ¥127.47 and shed 0.5% to $1.3170.
European Central Bank governing council member Axel Weber was quoted in a newspaper as saying cutting the central bank's main refinancing rate to 1% was appropriate. The rate is now 1.25%.
The market was also watching restructuring efforts by struggling US automakers. Worries about the future of Chrysler weighed on the dollar on Friday, when it fell against the euro and yen after news of improved business sentiment in Germany.
Chrysler, given until April 30 to agree deals with creditors and unions and cement an alliance with Fiat, showed signs of progress with its unionised workers, giving the dollar a brief lift against the yen in early trade.
News from a meeting of world finance leaders in Washington at the weekend was overshadowed by the swine flu concerns.
The finance leaders agreed there was a "break in the clouds" of the economic storm but said more measures were needed to ensure an end to the global recession.
A statement from the International Monetary and Financial Committee of the IMF said more action was needed to restore the health of banks and revive lending.
- Reuters