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Friday March 23, 5:16 PMDollar shows strength around 118 yen level in Tokyo trading(Kyodo) _ The U.S. dollar stayed above the 118 yen line for most of Friday's trading in Tokyo as investors sought to find a new direction following the dollar's sell-off sparked by a statement released by the U.S central bank earlier this week.At 5 p.m., the dollar was quoted at 117.94-97 yen against Thursday's 5 p.m. quotes of 118.08-18 yen in New York and 117.31-33 yen in Tokyo. It moved between 117.87 yen and 118.26 yen during the day, trading most frequently at 118.00 yen. At 5 p.m., the euro traded at $1.3328-3331 and 157.22-26 yen against Thursday's 5 p.m. quotes of $1.3325-3335 and 157.41-51 yen in New York and $1.3377-3379 and 156.93-97 yen in Tokyo. The dollar inherited strength from overseas trading and remained mostly in the lower 118 yen range, as some investors eased speculation of a near-term interest rate cut in the United States, while others were encouraged to buy the dollar by healthy U.S. and Japanese stocks, dealers said. The firmness in U.S. and Japanese stocks prompted investors to ease up and take on some riskier assets, opening up to the yen carry trade, in which investors borrow yen at low interest rates and convert it into dollars and other currencies to invest in high-yielding assets, according to dealers. "The concept of healthy stocks prompting investors to buy the dollar on speculation of an interest rate hike or stay, still remains in investors' mind-sets," said Osamu Takashima, chief currency analyst at the Bank of Tokyo-Mitsubishi UFJ. But the dollar briefly weakened during Tokyo trading hours, spurred by exporting companies and individual investors buying the yen. It dipped into the upper 117 yen range in the morning, leading some traders to sell the currency for profit as investors were still worried about the stability of the market. Takashima pointed out that investors were still being held back over the thought of another dollar plunge, such as that of almost three weeks ago. "The dollar plunge into the 115 yen range (from around the 120 yen level) is still holding investors back from taking further risks," said Takashima, adding, "It's still frightening to them." "Investors are likely to have taken profits, because there still isn't proof" of the strength of the U.S. economy, said Daisuke Uno, a market strategist for Sumitomo Mitsui Banking Corp., who pointed out that hints as to where the currency market was headed may lie in housing and inflation readings due out in the week to come. Takashima pointed out that a speech by Federal Reserve Board Chairman Ben Bernanke, scheduled for next Wednesday, will draw market attention as he is "expected to talk about the U.S. economic outlook, such as subprime mortgage loans." "The dollar can strengthen or weaken depending on his remarks next week," he said. On Wednesday, the Fed left its key short-term target rate steady at 5.25 percent but dropped its reference to credit tightening and used a more neutral phrase -- "future policy adjustment" -- in the statement, which some market participants took as opening the way for credit easing, prompting them to sell the U.S. currency against the yen and the euro. |
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