Dollar gains on euro amid rate hike speculation
Tuesday, 3 June 2008
TOKYO, June 2 (AFP): The dollar climbed against the euro in Asian trade Monday on speculation that United States (US) interest rate rises could make the currency more attractive, dealers said.
But the greenback was slightly easier against the Japanese currency, dropping to 105.35 yen in Tokyo afternoon trade from 105.51 in New York late Friday.
The euro fell to 1.5527 dollars from 1.5553 and to 163.57 yen from 164.14.
Dealers said the US currency was propped up against the euro by conjecture that inflation worries may prompt the Federal Reserve to jack up interest rates later this year, boosting returns on US assets.
"Even if some bad news related to the dollar crops up, higher interest rates in America will support (the currency) for the time being," Hideaki Inoue, chief foreign-exchange manager at Mitsubishi UFJ Trust and Banking, told Dow Jones Newswires.
Dealers were looking ahead of the results of a survey of US manufacturing activity by the Institute of Supply Management due later Monday, as well as Friday's key monthly US jobs report.
The Fed has expressed concern about inflationary pressures in recent months as world oil prices have rocketed to record highs.
The US central bank has slashed interest rates this year in a bid to boost US economic momentum, but cuts have weighed on the dollar as investors typically prefer to hold currencies in countries with higher returns.
Some analysts said that soaring raw material costs could be negative for the dollar because of concerns about the impact on consumption and company profits in the world's largest economy.
The euro has gained momentum against the dollar in recent months as the European Central Bank (ECB) has opted not to cut euro zone rates, despite rising inflation worries in Europe.
Analysts expect the ECB to leave its key rate unchanged at 4.0 percent Thursday at the end of a regular meeting.
Against regional Asian currencies, the greenback declined to 1.3630 Singapore dollars from 1.3660, to 1,022.55 South Korean won from 1,030.05 and to 43.58 Philippine pesos from 43.76.
It dropped to 30.23 Taiwan dollars from 30.41, while rising to 9,313.0 Indonesian rupiah from 9,310.0 and to 32.50 Thai baht from 32.49.
But the greenback was slightly easier against the Japanese currency, dropping to 105.35 yen in Tokyo afternoon trade from 105.51 in New York late Friday.
The euro fell to 1.5527 dollars from 1.5553 and to 163.57 yen from 164.14.
Dealers said the US currency was propped up against the euro by conjecture that inflation worries may prompt the Federal Reserve to jack up interest rates later this year, boosting returns on US assets.
"Even if some bad news related to the dollar crops up, higher interest rates in America will support (the currency) for the time being," Hideaki Inoue, chief foreign-exchange manager at Mitsubishi UFJ Trust and Banking, told Dow Jones Newswires.
Dealers were looking ahead of the results of a survey of US manufacturing activity by the Institute of Supply Management due later Monday, as well as Friday's key monthly US jobs report.
The Fed has expressed concern about inflationary pressures in recent months as world oil prices have rocketed to record highs.
The US central bank has slashed interest rates this year in a bid to boost US economic momentum, but cuts have weighed on the dollar as investors typically prefer to hold currencies in countries with higher returns.
Some analysts said that soaring raw material costs could be negative for the dollar because of concerns about the impact on consumption and company profits in the world's largest economy.
The euro has gained momentum against the dollar in recent months as the European Central Bank (ECB) has opted not to cut euro zone rates, despite rising inflation worries in Europe.
Analysts expect the ECB to leave its key rate unchanged at 4.0 percent Thursday at the end of a regular meeting.
Against regional Asian currencies, the greenback declined to 1.3630 Singapore dollars from 1.3660, to 1,022.55 South Korean won from 1,030.05 and to 43.58 Philippine pesos from 43.76.
It dropped to 30.23 Taiwan dollars from 30.41, while rising to 9,313.0 Indonesian rupiah from 9,310.0 and to 32.50 Thai baht from 32.49.