Dollar extends gains on AIG rescue
Thursday, 18 September 2008
TOKYO, Sept 17 (AFP): The dollar extended gains against the yen in Asian trade Wednesday after the US Federal Reserve announced an unprecedented rescue package for troubled insurance giant AIG, dealers said.
The greenback was also supported after the Fed decided to hold interest rates steady despite recent market turmoil, a move seen as a sign of confidence in a recovery.
The dollar firmed to 106.00 yen in Tokyo afternoon trade from 105.62 in New York late Tuesday.
But the dollar lost part of its earlier gains after the Bank of Japan unanimously decided to keep interest rates at a low 0.50 per cent in line with earlier expectations.
The euro strengthened to 1.4173 dollars from 1.4127 and to 150.19 yen from 149.27 on a stronger-than-expected German business confidence survey, but the currency remains near one- year lows against the greenback.
The Fed announced an 85-billion-dollar rescue loan to save American International Group (AIG) from bankruptcy amid fears of a catastrophic effect on financial markets.
In an unprecedented intervention into private business, the US central bank agreed that the government will get an equity stake of 79.9 per cent in the insurer.
Calyon analysts also warned: "The situation remains very volatile and we certainly wouldn't suggest this will mark a sustained easing in risk aversion, but more likely some much- needed respite before pressure resumes."
Worries continued to pervade markets as the US housing market remains in a slump due to the subprime crisis over loans to high- risk customers, analysts said.
The dollar was mixed against Asian units.
The US unit fell to 32.08 Taiwan dollars from 32.17 on Tuesday, to 1,136.18 South Korean won from 1,158.30 and to 47.03 Philippine pesos from 47.24.
It also declined to 9,400 Indonesia rupiah from 9,450 but rose to 1.4346 Singapore dollars from 1.4312 and to 34.35 Thai baht from 34.23.
The greenback was also supported after the Fed decided to hold interest rates steady despite recent market turmoil, a move seen as a sign of confidence in a recovery.
The dollar firmed to 106.00 yen in Tokyo afternoon trade from 105.62 in New York late Tuesday.
But the dollar lost part of its earlier gains after the Bank of Japan unanimously decided to keep interest rates at a low 0.50 per cent in line with earlier expectations.
The euro strengthened to 1.4173 dollars from 1.4127 and to 150.19 yen from 149.27 on a stronger-than-expected German business confidence survey, but the currency remains near one- year lows against the greenback.
The Fed announced an 85-billion-dollar rescue loan to save American International Group (AIG) from bankruptcy amid fears of a catastrophic effect on financial markets.
In an unprecedented intervention into private business, the US central bank agreed that the government will get an equity stake of 79.9 per cent in the insurer.
Calyon analysts also warned: "The situation remains very volatile and we certainly wouldn't suggest this will mark a sustained easing in risk aversion, but more likely some much- needed respite before pressure resumes."
Worries continued to pervade markets as the US housing market remains in a slump due to the subprime crisis over loans to high- risk customers, analysts said.
The dollar was mixed against Asian units.
The US unit fell to 32.08 Taiwan dollars from 32.17 on Tuesday, to 1,136.18 South Korean won from 1,158.30 and to 47.03 Philippine pesos from 47.24.
It also declined to 9,400 Indonesia rupiah from 9,450 but rose to 1.4346 Singapore dollars from 1.4312 and to 34.35 Thai baht from 34.23.