Yen rebounds in Asia after sharp fall
Thursday, 30 October 2008
TOKYO, Oct 29 (AFP): The yen rebounded against the dollar and the euro in Asia today after falling sharply a day earlier on speculation about a possible interest rate cut in Japan this week.
The dollar fell to 96.57 yen in Tokyo afternoon trade, down from 97.47 in New York late Tuesday. The euro fell to 122.21 yen from 124.33 but climbed to 1.2643 dollars from 1.2597.
The Japanese currency had tumbled in US trade Tuesday as world stock markets soared and a report said the Bank of Japan was considering cutting its super-low interest rates by 25 basis points to 0.25 per cent Friday.
"Even though some investors left the safety of the yen, a majority of short-term investors are likely to stick with the currency because the Japanese economy is relatively intact," said Hiroshi Sakurai, currency analyst at Mizuho Investors Securities.
Traders were expecting a cut in interest rates from the US Federal Reserve later in the day as part of an unrelenting effort by the central bank to restore confidence to battered markets.
The US central bank, which led a coordinated global rate cut earlier this month that pushed its target rate down a half-point to 1.50 per cent, is seen as likely to trim the rate by up to 50 basis points.
Analysts said that a rate cut in Japan now seemed likely and markets would be disappointed if the BoJ did not act.
"The rise in share prices seen even in the US suggests the possibility of a sharp negative reaction if the BoJ now fails to cut rates-a situation that could force the bank's hand," said Barclays Capital analysts.
The Australian dollar also rebounded, rising by more than four per cent to 0.6377 US dollars as turmoil eased on equities markets.
The dollar was mixed against other regional currencies.
It rose to 1,431 South Korean won, 1.5036 Singapore dollars, 49.13 Philippine pesos and 34.90 Thai bhat.
But the greenback slipped to 33.30 Taiwan dollars and was flat at 11,050 Indonesian rupiah.
The dollar fell to 96.57 yen in Tokyo afternoon trade, down from 97.47 in New York late Tuesday. The euro fell to 122.21 yen from 124.33 but climbed to 1.2643 dollars from 1.2597.
The Japanese currency had tumbled in US trade Tuesday as world stock markets soared and a report said the Bank of Japan was considering cutting its super-low interest rates by 25 basis points to 0.25 per cent Friday.
"Even though some investors left the safety of the yen, a majority of short-term investors are likely to stick with the currency because the Japanese economy is relatively intact," said Hiroshi Sakurai, currency analyst at Mizuho Investors Securities.
Traders were expecting a cut in interest rates from the US Federal Reserve later in the day as part of an unrelenting effort by the central bank to restore confidence to battered markets.
The US central bank, which led a coordinated global rate cut earlier this month that pushed its target rate down a half-point to 1.50 per cent, is seen as likely to trim the rate by up to 50 basis points.
Analysts said that a rate cut in Japan now seemed likely and markets would be disappointed if the BoJ did not act.
"The rise in share prices seen even in the US suggests the possibility of a sharp negative reaction if the BoJ now fails to cut rates-a situation that could force the bank's hand," said Barclays Capital analysts.
The Australian dollar also rebounded, rising by more than four per cent to 0.6377 US dollars as turmoil eased on equities markets.
The dollar was mixed against other regional currencies.
It rose to 1,431 South Korean won, 1.5036 Singapore dollars, 49.13 Philippine pesos and 34.90 Thai bhat.
But the greenback slipped to 33.30 Taiwan dollars and was flat at 11,050 Indonesian rupiah.