FS: World Forex: Yen up vs Dollar, Euro amid fragile Asian shares
The yen regained some ground against the dollar and the euro in Asia Tuesday on demand from Japanese exporters as well as speculators' buying of safe-haven currencies driven by fragile Asian stocks.
Among regional currencies, the Australian dollar recouped some of its losses against other major currencies after the country's central bank cut its interest rate from 3.25% to 3.00%, the lowest level in 49 years. Some speculators who had sold the Aussie in anticipation of a greater reduction bought it back, dealers said.
During Asian hours, the U.S. dollar fell to Y100.22 on EBS from Y101.00 in New York late Monday before recovering to around Y100.60. The euro dropped to Y133.64 from Y135.49, though it later came back to Y134.50. The U.S. unit - seen as the second-safest currency after the yen - was mostly higher against other majors except the Japanese currency.
Still, the yen's appreciation failed to convince traders that its recent broad weakness is over.
They said its climb was largely due to short-term speculators unloading their short-yen positions - or bets for a weaker yen - on the view that lackluster Asian stocks might lead people to resume buying the currency as a refuge. In the broader markets, demand for safe currencies remained only mild thanks partly to global equity firmness over preceding days and hopes that authorities' actions may help revive growth, they added.
"The markets look pretty relaxed," said Satoshi Okagawa, head of foreign exchange spot trading group at Sumitomo Mitsui Banking Corp. "I don't have the impression the yen is poised to rise much further."
Asian shares around 0500 GMT were slightly back in positive territory. Most of the region's stock indexes were down earlier in the day following Wall Street's pullback.
Tetsuhisa Hayashi, head of foreign-exchange dealing at Bank of Tokyo-Mitsubishi UFJ, echoed Okagawa's assessment. Hayashi expects the U.S. currency to trade in a range of Y99.00 to Y102.00 this week.
But "there's a feeling that we shouldn't chase the yen lower aggressively," Hayashi said. "Looking over a month or two, there are still risks over the fate of (besieged U.S. carmakers) General Motors and Chrysler as well as uncertainty about how Washington will handle the results of stress tests" being conducted on the nation's 19 largest banks, he said.
