Yen Firms against Dollar in Asia

Tokyo, Japan (News Today) - The yen firmed against the dollar in Asian trade Friday but remained well below the highs attained before Japan intervened in markets this week to stem the unit’s strength. The yen traded at 85.72 to the dollar in Tokyo afternoon trade, strengthening from 85.90 in New York but still sharply below the 15-year high of 82.86 hit Wednesday in Tokyo before Japan stepped into forex markets.

The euro stood at 1.3140 dollars and 112.62 yen, from 1.3078 dollars and 112.15 yen in New York. Japan’s Finance Minister Yoshihiko Noda, who was earlier told he will keep his post in a new cabinet, said Friday the government will intervene again in the forex market to weaken the yen if necessary.

“I will continue to monitor market developments while maintaining a sense of gravity,” Noda told a news conference, while placing further pressure on the Bank of Japan to “continue significant monetary easing.”

The central bank indicated it would leave the extra supply of yen — reportedly around two trillion yen (23 billion dollars) — sloshing around the money market to bolster lending and weaken the currency instead of adopting mopping-up policies usually deployed to prevent inflation. Japan is looking to end years of damaging deflation.

“This can be viewed as another form of quantitative easing,” Morgan Stanley analysts said.

But dealers said the dollar could fall back below 85 yen as Japan’s moves will invite speculators to build up long positions at better levels with players generally bearish on the dollar. Morgan Stanley noted that it was not certain whether Japanese authorities would be as aggressive this time around as a 2003-2004 intervention programme, which totalled 35 trillion yen.

The yuan ended its six-day rally against the US dollar Friday after the completion of closely watched US Congressional hearings on Beijing’s exchange rate policy. The dollar was quoted at 6.7266 yuan, off an intraday high of 6.7307, but up from 6.7248 at Thursday’s close.

The yuan’s decline came after the People’s Bank of China set the dollar-yuan central parity at 6.7172, just lower than 6.7181 Thursday.

“The central parity was certainly higher than expected and so demand for the dollar has again dominated trading this morning,” a Shanghai-based trader at an Asian bank told Dow Jones Newswires.

Against hostile congressional questioning, US Treasury Secretary Timothy Geithner pressed China to boost the value of its currency but also tried to fend off lawmakers who want the administration to take harsher action. The dollar dropped against other Asian currencies.

It eased to 1,160.50 South Korean won from 1,164.20 Thursday, to 8,979.00 Indonesian rupiah from 8,983.00, to 1.3337 Singaporean dollars from 1.3381, to 30.74 Thai baht from 30.89, to 44.21 Philippine pesos from 44.37 and to 31.70 Taiwan dollars from 31.76.

Source : kompas

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