Yen gains in Asian trade on risk aversion
Friday, 26 October 2007
TOKYO, Oct 25 (AFP): The yen gained on the dollar and euro in Asian trade today as investors shunned riskier assets amid concerns about slowing US economic growth and expectations of another rate cut there, dealers said.
The dollar slipped to 113.97 yen in Tokyo afternoon trade from 114.24 in New York late Wednesday.
The euro dropped to 162.59 yen from 162.97 but was relatively stable at 1.4267 dollars after 1.4264.
Traders' risk appetite declined in the aftermath of negative US housing data and news of severe losses at Wall Street giant Merrill Lynch linked to recent problems in credit markets.
The yen rose as players scaled down risky carry trades that involve selling low-return currencies for high yielding ones, said Yoshifumi Suzuki, forex dealer at Hachijuni Bank.
The National Association of Realtors Wednesday reported a steeper-than-expected eight per cent slide in existing US home sales, heightening concerns about the outlook for the world's largest economy.
Market expectations that the US Federal Reserve will lower its benchmark lending rate at its two-day meeting next week were also making dollar assets less attractive, dealers said.
"A lot of investors have changed their views and are now betting that the Fed will lower its interest rates by end of the month," said Daniel Chan, senior investment strategist at DBS Bank.
The Fed on September 18 reduced rates by a hefty 50 basis points, its first cut in more than four years, causing investors to dump the dollar, which fell to record lows against major currencies, including the euro.
The Australian dollar continued to rise against the greenback towards fresh 23-year highs amid growing expectations of further interest rates rises by Australia's central bank due to stronger- than-expected inflation, dealers said.
The dollar slipped to 113.97 yen in Tokyo afternoon trade from 114.24 in New York late Wednesday.
The euro dropped to 162.59 yen from 162.97 but was relatively stable at 1.4267 dollars after 1.4264.
Traders' risk appetite declined in the aftermath of negative US housing data and news of severe losses at Wall Street giant Merrill Lynch linked to recent problems in credit markets.
The yen rose as players scaled down risky carry trades that involve selling low-return currencies for high yielding ones, said Yoshifumi Suzuki, forex dealer at Hachijuni Bank.
The National Association of Realtors Wednesday reported a steeper-than-expected eight per cent slide in existing US home sales, heightening concerns about the outlook for the world's largest economy.
Market expectations that the US Federal Reserve will lower its benchmark lending rate at its two-day meeting next week were also making dollar assets less attractive, dealers said.
"A lot of investors have changed their views and are now betting that the Fed will lower its interest rates by end of the month," said Daniel Chan, senior investment strategist at DBS Bank.
The Fed on September 18 reduced rates by a hefty 50 basis points, its first cut in more than four years, causing investors to dump the dollar, which fell to record lows against major currencies, including the euro.
The Australian dollar continued to rise against the greenback towards fresh 23-year highs amid growing expectations of further interest rates rises by Australia's central bank due to stronger- than-expected inflation, dealers said.