Dollar dips as rate hike speculation ebbs
Friday, 20 June 2008
TOKYO, June 19 (AFP): The dollar drifted lower in Asian trade today, pressured by a rise in oil prices and fading expectations of US interest rate rises this year, dealers said.
The dollar slipped to 107.64 yen in Tokyo afternoon trade from 107.86 in New York late Wednesday.
The euro edged up to 1.5559 dollars from 1.5532 but was flat at 167.48 yen.
"Recent economic indicators and earnings results have clearly shown that downside risks to the US economy persist," Tsutomu Soma, a senior trader at Okasan Securities, told Dow Jones Newswires.
Higher interest rates would probably be supportive for the greenback because they would attract investment inflows, dealers said. Stocks fell heavily on Wall Street Wednesday on concerns about problems in the financial sector and a jump in crude oil prices.
The gloomy news caused investors to reassess their expectations of higher borrowing rates in the United States, despite inflation worries. At the same time traders expect the European Central Bank to raise its benchmark lending rate next month.
Inflation in the eurozone, which hit an annualised 3.7 per cent in May, is at an "unacceptable" level, ECB chief economist Juergen Stark said.
But other ECB officials have dampened expectations the central bank might be preparing for a series of rate increases.
Traders were waiting for a manufacturing index for the Philadelphia region as well as US weekly jobless claims due to be released later Thursday.
Against regional Asian currencies, the dollar fell to 1.3671 Singapore dollars from 1.3682 Wednesday and to 1,025.80 South Korean won from 1,029.20.
The dollar slipped to 107.64 yen in Tokyo afternoon trade from 107.86 in New York late Wednesday.
The euro edged up to 1.5559 dollars from 1.5532 but was flat at 167.48 yen.
"Recent economic indicators and earnings results have clearly shown that downside risks to the US economy persist," Tsutomu Soma, a senior trader at Okasan Securities, told Dow Jones Newswires.
Higher interest rates would probably be supportive for the greenback because they would attract investment inflows, dealers said. Stocks fell heavily on Wall Street Wednesday on concerns about problems in the financial sector and a jump in crude oil prices.
The gloomy news caused investors to reassess their expectations of higher borrowing rates in the United States, despite inflation worries. At the same time traders expect the European Central Bank to raise its benchmark lending rate next month.
Inflation in the eurozone, which hit an annualised 3.7 per cent in May, is at an "unacceptable" level, ECB chief economist Juergen Stark said.
But other ECB officials have dampened expectations the central bank might be preparing for a series of rate increases.
Traders were waiting for a manufacturing index for the Philadelphia region as well as US weekly jobless claims due to be released later Thursday.
Against regional Asian currencies, the dollar fell to 1.3671 Singapore dollars from 1.3682 Wednesday and to 1,025.80 South Korean won from 1,029.20.