Yen pulls back after Australian rate cut
Wednesday, 8 October 2008
TOKYO, Oct 7 (AFP): The yen eased back while the euro rebounded in Asia today as global markets showed signs of stabilising, helped by a big cut in Australian interest rates, dealers said.
The move sparked hopes that other central banks could also lower borrowing costs to try to prop up their ailing markets and economies.
The euro rose to 1.3575 dollars in late Tokyo trade from 1.3523 in New York late on Monday, when it had struck a 14-month low. The euro gained to 139.70 yen from 137.75.
The dollar was at 101.90 yen, well off a seven-month low of 100.24 seen on Monday.
The Reserve Bank of Australia surprised markets by slashing interest rates by 100 basis points to 6.0 per cent.
The Australian dollar hit a two-year low after the announcement, continuing a steep decline since hitting a 25-year high of 98.49 US cents in mid-July. In late Sydney trade the Australian dollar stood at around 73 cents.
Analysts said the boost to sentiment from the rate cut could be short-lived as uncertainty and fear continue to grip markets.
They said the Japanese currency is expected to resume its upward trend as investors shun risk.
Japan's central bank left its key interest rate steady at 0.5 per cent and governor Masaaki Shirakawa showed little enthusiasm for coordinated rate cuts, saying monetary policy should be decided by each country.
The yen has been in demand of late as jittery investors buy back the currency to unwind risky positions funded with cheap Japanese credit.
The plunges on global markets reflected a lack of confidence in the recent efforts by the US and European authorities to try to ease fears about credit flows drying up and to stabilise their banking systems, he said.
Finance chiefs from the Group of Seven rich nations are scheduled to meet Friday in Washington.
Against regional Asian currencies, the dollar rose to 1,329.90 South Korean won from 1,272.50 on Monday, to 32.36 Taiwan dollars from 32.32 and to 47.46 Philippine pesos from 47.39.
It gained to 9,595 Indonesian rupiah from 9,570 and to 34.43 Thai baht from 34.37, while slipping to 1.4608 Singapore dollars from 1.4616.
The move sparked hopes that other central banks could also lower borrowing costs to try to prop up their ailing markets and economies.
The euro rose to 1.3575 dollars in late Tokyo trade from 1.3523 in New York late on Monday, when it had struck a 14-month low. The euro gained to 139.70 yen from 137.75.
The dollar was at 101.90 yen, well off a seven-month low of 100.24 seen on Monday.
The Reserve Bank of Australia surprised markets by slashing interest rates by 100 basis points to 6.0 per cent.
The Australian dollar hit a two-year low after the announcement, continuing a steep decline since hitting a 25-year high of 98.49 US cents in mid-July. In late Sydney trade the Australian dollar stood at around 73 cents.
Analysts said the boost to sentiment from the rate cut could be short-lived as uncertainty and fear continue to grip markets.
They said the Japanese currency is expected to resume its upward trend as investors shun risk.
Japan's central bank left its key interest rate steady at 0.5 per cent and governor Masaaki Shirakawa showed little enthusiasm for coordinated rate cuts, saying monetary policy should be decided by each country.
The yen has been in demand of late as jittery investors buy back the currency to unwind risky positions funded with cheap Japanese credit.
The plunges on global markets reflected a lack of confidence in the recent efforts by the US and European authorities to try to ease fears about credit flows drying up and to stabilise their banking systems, he said.
Finance chiefs from the Group of Seven rich nations are scheduled to meet Friday in Washington.
Against regional Asian currencies, the dollar rose to 1,329.90 South Korean won from 1,272.50 on Monday, to 32.36 Taiwan dollars from 32.32 and to 47.46 Philippine pesos from 47.39.
It gained to 9,595 Indonesian rupiah from 9,570 and to 34.43 Thai baht from 34.37, while slipping to 1.4608 Singapore dollars from 1.4616.