Dollar dips against yen in Asia
Agence France-Presse | 11/02/2009 11:46 AM
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TOKYO - The dollar fell further against the yen in Asian trade on Monday as fresh worries about the US financial sector lifted demand for the "safe-haven" Japanese currency, dealers said.
The greenback slid to as low as 89.18 yen, before recovering somewhat to 89.95 yen in Tokyo late morning trade, down from 90.08 in New York on Friday.
The euro edged up to 1.4736 dollars against 1.4715, recovering some of its heavy losses seen at the end of last week. The European currency was steady at 132.65 yen after 132.62.
Investors bought the yen after US lender CIT Group filed for bankruptcy protection on Sunday, reigniting jitters about the woes of the US financial sector.
The dollar recovered some of its early losses due to fears it had fallen too rapidly, "but it will likely remain under pressure," said Hideaki Inoue, chief forex manager at Mitsubishi UFJ Trust and Banking Corp.
Barclays Capital analysts said CIT Group's troubles had triggered fears among currency traders that the lender could suffer a similar fate to Wall Street giant Lehman Brothers, whose collapse last year rocked world markets.
But they said the CIT bankruptcy, while significant, was unlikely to have a lasting impact on the foreign exchange markets.
"Importantly, according to the company, the bankruptcy is designed to allow CIT to continue to provide funding to its small and medium-sized businesses, and also, in our view, to reduce the knock-on effects," they wrote in a note.
Investor risk appetite was also reduced by a sharp drop in stocks on Wall Street on Friday that sent Asian markets lower on Monday.
Markets were also nervous ahead of monetary policy decisions due this week in the United States, the eurozone, Britain and Australia, as well as key US jobs data on Friday.
"I think the market will react sensitively (to developments) this week," he said. "But investors expect no major changes or an exit strategy from the stimulus policy to be announced by the Fed," Inoue said.
The US Federal Reserve (Fed) is widely expected to hold its key lending rate steady with a range of zero to 0.25 percent until early 2010.
Australia's central bank, however, is tipped to announce on Tuesday that it is raising its benchmark interest rate for the second time in less than a month to prevent the domestic economy overheating.
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