Dollar gains on yen amid easing US mortgage worries
Tuesday, 15 July 2008
TOKYO, July 14 (AFP): The dollar rose against the yen in Asian trade today.
The dollar firmed to 106.51 yen in Tokyo afternoon trade from 106.25 in New York late Friday. The euro gained to 1.5878 dollars from 1.5832 while slipping to 169.11 yen from 169.30.
The dollar was supported against the yen after US Treasury Secretary Henry Paulson yesterday announced bigger credit lines for Fannie Mae and Freddie Mac, which offer vital support to the multitrillion-dollar US mortgage market.
The steps "boosted hopes that some calm will return to US financial markets," said Kazuhiko Shibata, Tokyo branch manager of Dresdner Bank.
Fannie Mae and Freddie Mac together own or guarantee about 40 per cent of the total value of home loans in the United States.
"It now seems unthinkable that the US government will just let those (two companies) go under without doing anything. That should be taken as something positive," Deutsche Securities strategist Koji Fukaya told Dow Jones Newswires.
But the measures do not mean that the US economy is in better shape than before or that interest rates there are set to be raised, "so it's tough to buy the dollar," Fukaya said.
Paulson said the two organisations would get a bigger credit line "temporarily," without giving further details. He said the Treasury Department would get temporary authority to buy their shares should that be necessary.
Meanwhile the Federal Reserve Bank of New York was granted the authority to lend to Fannie Mae and Freddie Mac if needed.
Traders were nervous ahead of earnings results from Wall Street giants Merrill Lynch and JPMorgan Chase on Thursday, followed by Citigroup on Friday.
"If the banks reveal bigger-than-expected losses, that could trigger a heavy sell-off of the dollar," said Shibata.
Against regional Asian currencies, the dollar eased to 1.3562 Singapore dollars from 1.3603 on Friday, to 9,154 Indonesian rupiah from 9,160 and to 45.52 Philippine pesos from 45.82.
It firmed to 1,005.65 South Korean won from 1,002.55 while holding steady at 30.40 Taiwan dollars and at 33.67 Thai baht.
The dollar firmed to 106.51 yen in Tokyo afternoon trade from 106.25 in New York late Friday. The euro gained to 1.5878 dollars from 1.5832 while slipping to 169.11 yen from 169.30.
The dollar was supported against the yen after US Treasury Secretary Henry Paulson yesterday announced bigger credit lines for Fannie Mae and Freddie Mac, which offer vital support to the multitrillion-dollar US mortgage market.
The steps "boosted hopes that some calm will return to US financial markets," said Kazuhiko Shibata, Tokyo branch manager of Dresdner Bank.
Fannie Mae and Freddie Mac together own or guarantee about 40 per cent of the total value of home loans in the United States.
"It now seems unthinkable that the US government will just let those (two companies) go under without doing anything. That should be taken as something positive," Deutsche Securities strategist Koji Fukaya told Dow Jones Newswires.
But the measures do not mean that the US economy is in better shape than before or that interest rates there are set to be raised, "so it's tough to buy the dollar," Fukaya said.
Paulson said the two organisations would get a bigger credit line "temporarily," without giving further details. He said the Treasury Department would get temporary authority to buy their shares should that be necessary.
Meanwhile the Federal Reserve Bank of New York was granted the authority to lend to Fannie Mae and Freddie Mac if needed.
Traders were nervous ahead of earnings results from Wall Street giants Merrill Lynch and JPMorgan Chase on Thursday, followed by Citigroup on Friday.
"If the banks reveal bigger-than-expected losses, that could trigger a heavy sell-off of the dollar," said Shibata.
Against regional Asian currencies, the dollar eased to 1.3562 Singapore dollars from 1.3603 on Friday, to 9,154 Indonesian rupiah from 9,160 and to 45.52 Philippine pesos from 45.82.
It firmed to 1,005.65 South Korean won from 1,002.55 while holding steady at 30.40 Taiwan dollars and at 33.67 Thai baht.