The dollar was changing hands at 85.81 yen in Tokyo afternoon trade, down from 86.28 yen late Friday in New York, where the greenback had slumped to the mid-84 yen level last week.

The euro edged up to US$1.2791compared with US$1.2750, while it eased to 109.72 yen from 109.95.

Global recovery fears were brought into focus by Japan’s weaker-than-expected gross domestic product figures, as it reported that its economy grew at the slowest pace in three quarters during April-June.

Real gross domestic product increased by an annualized 0.4 percent in the quarter, sharply missing forecasts from economists polled by Dow Jones Newswires of 2.3 percent annualized growth.

On a quarterly basis, growth was at 0.1 percent, down from a revised 1.1 percent in the previous quarter.

“The United States and Europe are allowing a weaker currency of their own, because it would help their economic recovery,” said Hideaki Inoue, chief forex manager at Mitsubishi UFJ Trust and Banking Corp.

“Under the environment where the yen would surge if Japan takes no action, market players are carefully watching what the authorities in Tokyo will do.”

A stronger yen poses a threat to the export sector driving Japan’s fragile economic rebound.

Some dealers fear that the dollar could continue to slide below its all-time-low of 79.75 yen as investors stay focused on uncertain U.S. economic growth.

The U.S. Federal Reserve warned last week that recovery in the world’s largest economy was facing a slowdown.

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