Yen softens in Asian trade as investor jitters ease
Wednesday, 2 December 2009
TOKYO, Dec 1 (AFP): The yen softened against the dollar and euro in Asian trade Tuesday on profit-taking as fears over a default crisis in Dubai eased and ahead of a central bank meeting in Tokyo, dealers said.
Investors were waiting for the outcome of the extraordinary monetary policy meeting by the Bank of Japan amid speculation it will announce fresh steps to help shore up the economy.
The dollar firmed to 87.32 yen in Tokyo afternoon trade from 86.28 in New York late Monday. The euro was stable at 1.5004 but rose to 131.09 yen from 129.50.
"There remains some uncertainty around Dubai, which is likely to weigh on risky assets in the near term, but we believe the impact of the Dubai shock is likely to be rather short- lived," Barclays analysts told clients.
"Some corrections in the overstretched currencies are possible once the concern abates," they added.
Jitters eased after news that the Gulf city-state's flagship conglomerate Dubai World will restructure 26 billion dollars in debt of some of its companies.
The United Arab Emirates central bank over the weekend also pledged to provide additional liquidity in the banking sector.
Dubai's debt freeze announcement last week had rocked markets as investors feared a possible default by the government and state-owned businesses, which together owe an estimated 80 billion dollars.
The most recent announcement helped improve investor risk- appetite and a rebound in global share prices overnight, NAB Capital strategist John Kyriakopoulos said.
Investors were waiting for the outcome of the extraordinary monetary policy meeting by the Bank of Japan amid speculation it will announce fresh steps to help shore up the economy.
The dollar firmed to 87.32 yen in Tokyo afternoon trade from 86.28 in New York late Monday. The euro was stable at 1.5004 but rose to 131.09 yen from 129.50.
"There remains some uncertainty around Dubai, which is likely to weigh on risky assets in the near term, but we believe the impact of the Dubai shock is likely to be rather short- lived," Barclays analysts told clients.
"Some corrections in the overstretched currencies are possible once the concern abates," they added.
Jitters eased after news that the Gulf city-state's flagship conglomerate Dubai World will restructure 26 billion dollars in debt of some of its companies.
The United Arab Emirates central bank over the weekend also pledged to provide additional liquidity in the banking sector.
Dubai's debt freeze announcement last week had rocked markets as investors feared a possible default by the government and state-owned businesses, which together owe an estimated 80 billion dollars.
The most recent announcement helped improve investor risk- appetite and a rebound in global share prices overnight, NAB Capital strategist John Kyriakopoulos said.