The US dollar has hit a 14-year low against the Japanese yen with low interest rates in the US making the greenback less attractive to investors.

The dollar slipped to 86.5 yen, its lowest level since July 1995.

The US has indicated it is unconcerned about the dollar's slide, and will not intervene to strengthen it.

Many traders are swapping dollar holdings for gold as a safer investment in the current uncertain economic climate.

The price of gold is currently at a record high of $1,194.5 an ounce.

Close watch

"This yen strengthening is caused by dollar selling rather than yen buying, so this is not something Japan can handle itself," said Yutaka Miura at Mizuho Securities.

"This trend will continue unless the Japanese government takes action, in co-operation with the US."

In the short term at least, analysts said such intervention was unlikely.

Finance Minister Hirohisa Fujii said that he was keeping "close tabs" on the yen and would take "appropriate measures" if exchange rates "moved abnormally".

But his comments did little to ease worries among investors.

"He is finance minister, so of course he should be monitoring foreign exchange closely," said Tsuyoshi Segawa at Mizuho Securities.

The strengthening yen relative to the dollar caused Japanese shares to fall, with the main Nikkei 225 index dragged lower by major exporters, whose products become more expensive in the US as the yen strengthens.

The dollar has also fallen significantly against the pound and the euro this year.