Dollar firms in Asia as traders eye Fed meet
Tuesday, 24 June 2008
TOKYO, June 23 (AFP): The dollar firmed in Asian trade today as traders bet the US Federal Reserve will hold interest rates steady at a meeting this week amid renewed jitters about the credit crunch.
The dollar rose to 107.41 in Tokyo afternoon trade from 107.25 in New York late Friday.
The euro slipped to 1.5590 dollars from 1.5611 while holding steady at 167.47 yen against 167.45.
Market players were looking ahead to the Federal Open Market Committee's (FOMC) two-day meeting slated to begin Tuesday at which US interest rates are expected to be left unchanged at 2.0 per cent, dealers said.
"Markets have returned to the situation three months ago" when the top concern was losses at major banks caused by the subprime mortgage crisis in the US, said Kazuhiko Shibata, Tokyo manager of Dresdner Bank.
"If the Fed continues to focus on inflation while recognising bad economic conditions, this would signal the possibility that (US) rate cuts have ended. Then the dollar would not be so easily sold," said Shibata.
Traders will be focusing on the Fed's post-meeting statement for any clues on prospects for higher US interest rates that could boost the greenback.
The Fed has slashed its key rate by 3.25 per centage points since the subprime crisis erupted in mid-2007.
Although, market players have scaled back their expectations of a series of US rate hikes this year, they still see a chance of one or two quarter-point rate rises by the end of 2008 to keep a lid on inflation, dealers said.
Traders also expect the European Central Bank to raise interest rates by a quarter point to 4.25 per cent at a July 3 meeting.
But due to concerns over the slowing eurozone economy, "the euro will not be bought aggressively," said Shibata.
Against regional Asian currencies, the dollar rose to 1,039.10 South Korean won from 1,027.60, to 30.40 Taiwan dollars from 30.34, to 44.49 Philippine pesos from 44.36 and to 9,265 Indonesian rupiah from 9,260.
At the same time the greenback slipped to 1.3652 Singapore dollars from 1.3682 and to 33.42 Thai baht from 33.51.
The dollar rose to 107.41 in Tokyo afternoon trade from 107.25 in New York late Friday.
The euro slipped to 1.5590 dollars from 1.5611 while holding steady at 167.47 yen against 167.45.
Market players were looking ahead to the Federal Open Market Committee's (FOMC) two-day meeting slated to begin Tuesday at which US interest rates are expected to be left unchanged at 2.0 per cent, dealers said.
"Markets have returned to the situation three months ago" when the top concern was losses at major banks caused by the subprime mortgage crisis in the US, said Kazuhiko Shibata, Tokyo manager of Dresdner Bank.
"If the Fed continues to focus on inflation while recognising bad economic conditions, this would signal the possibility that (US) rate cuts have ended. Then the dollar would not be so easily sold," said Shibata.
Traders will be focusing on the Fed's post-meeting statement for any clues on prospects for higher US interest rates that could boost the greenback.
The Fed has slashed its key rate by 3.25 per centage points since the subprime crisis erupted in mid-2007.
Although, market players have scaled back their expectations of a series of US rate hikes this year, they still see a chance of one or two quarter-point rate rises by the end of 2008 to keep a lid on inflation, dealers said.
Traders also expect the European Central Bank to raise interest rates by a quarter point to 4.25 per cent at a July 3 meeting.
But due to concerns over the slowing eurozone economy, "the euro will not be bought aggressively," said Shibata.
Against regional Asian currencies, the dollar rose to 1,039.10 South Korean won from 1,027.60, to 30.40 Taiwan dollars from 30.34, to 44.49 Philippine pesos from 44.36 and to 9,265 Indonesian rupiah from 9,260.
At the same time the greenback slipped to 1.3652 Singapore dollars from 1.3682 and to 33.42 Thai baht from 33.51.