TOKYO - The dollar fell against the yen in Asia Monday as reports that Washington may have to nationalise some ailing banks stoked fears over the depth of the global financial crisis.
The dollar slipped to 93.05 yen in Tokyo morning trade from 93.29 in New York late Friday.
The euro dropped to 1.2787 dollars from 1.2824 and to 119.09 yen from 119.63, hit by concerns over the health of the Eastern European economies.
"Markets are unsettled by two fears right now: the nationalisation of US banks and the financial crisis hitting Eastern Europe," said Ryohei Muramatsu, manager of Commerzbank's Group Treasury Asia in Tokyo.
The US government is in talks that could lead to it taking a 25-40 percent stake in Citigroup, The Wall Street Journal reported.
Senator Christopher Dodd, who heads the Senate banking committee, said that President Barack Obama's administration was seeking to avoid nationalising banks but did not rule out a short-term state takeover.
Fears about US banks pushed stocks down to six-year lows on Wall Street on Friday.
US Treasury Secretary Timothy Geithner was reportedly due to unveil more details of a banking rescue plan this week. Markets were disappointed by a lack of detail when Geithner first outlined the scheme earlier this month.
"The reaction of stocks will be an important driver of currencies this week," NAB Capital strategist John Kyriakopoulos wrote in a note to clients.
Some market watchers warned against excessive optimism over the Wall Street bailout.
"I think it is better for markets not to expect any concrete details on a swift plan from Geithner," said Muramatsu.
"If the speech disappoints investors again, it could put markets back into dangerous territory," he added.
Federal Reserve chairman Ben Bernanke will testify before Congress on Tuesday and Wednesday as the central bank turns to new tools to fix the economy, after lowering its key lending rate to its limit in December.
Investors were also looking ahead to Obama's congressional address on Tuesday as he pumps hundreds of billions of dollars into the US economy.
Markets will also digest a string of key US economic indicators this week including housing data, durable goods orders, consumer confidence and a second estimate of fourth-quarter gross domestic product.