NEW YORK: The yen dropped to a nearly two-week low against the dollar on Tuesday as risk appetite improved for a second straight session, undermining traditional safe havens such as the Japanese currency.

Repeated verbal warnings from Japan over the weekend and on Tuesday saying it was prepared to step in to weaken the currency also held off investors seeking to buy the yen at the expense of the dollar. The greenback has struggled recently with the Federal Reserve on track to raise US interest rates gradually.

“Risk appetite is naturally tied to the belief that we’re in an ultra-low-yield environment and investment managers can’t simply sit here,” said Jeremy Cook, chief economist at payments company World First in London.

“We have to see a move any time we see the slightest bit of positivity, by grabbing yield in emerging markets currencies, for instance.”

Crude oil and global stock markets were on the upswing overall led by European and Wall Street shares, adding to the positive risk sentiment.

In late trading, the dollar rose 0.9 percent to 109.25 yen, after hitting a roughly two-week peak of 109.34. The US currency tumbled to an 18-month low of 105.55 yen last week after the Bank of Japan stood pat on monetary policy.

Finance Minister Taro Aso said on Monday Tokyo was ready to intervene to weaken the currency if moves were volatile enough to hurt the country’s trade and economy. He reiterated that message on Tuesday.

A key economic adviser to Prime Minister Shinzo Abe, Koichi Hamada, also said on Tuesday Japan would intervene if the yen rose to between 90 and 95 per dollar.

The question remains, however, as to whether Japan’s intervention would be able to restrain the yen’s strength.

“Even if there is an actual intervention, its sustained success is far from guaranteed,” said James Chen, senior market analyst at Forex.com in New Jersey. “Monetary easing actions by the Bank of Japan in the past, most notably in January, have been unable to maintain any lasting yen weakness.”

In other currencies, the euro rose to a near two-week high of 124.45 yen, pulling away from a three-year trough of 121.48 plumbed late last week.

The euro was slightly lower against the dollar at $1.1365. The dollar index was up 0.2 percent at 94.279, after hitting its highest in nearly two weeks and extending its rise from a 15-month trough struck on May 3.—Reuters