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Greenback slightly firmer against yen in Asian trade

Greenback slightly firmer against yen in Asian trade

The U.S. dollar rebounded after falling sharply on yesterday against the yen over renewed concern about credit problems in the United States, dealers said.
But they said U.S. dollar-selling sentiment remained strong as the recent turmoil in equities may continue.
The financial chaos has led dealers to unwind their risky "carry trades" in which they borrow in Japan, which has ultra-low interest rates, to invest in higher-yielding economies.
The U.S. dollar rose to 114.37 yen in Tokyo morning trade from 114.25 in New York late Tuesday. The euro declined to US$1.3596 against US$1.3604 but rose to 155.50 yen after 155.44.
"The U.S. dollar rebounded in directionless trading as various kinds of speculation appeared and disappeared in the market," said Hironobu Hagi, deputy general manager at Shinsei Bank's capital markets division.
"It's as if players were scared about something flying in the dark," Hagi said.
"Selling pressure temporarily subdued after players confirmed some buying orders were lined up just below 114 yen, but it's certain that they'll try a weaker U.S. dollar again at some point," Hagi said.
The yen remained firmer against high-yielding currencies. The Australian dollar fell to 92.09 yen from 92.85 yen while the British pound declined to 228.04 yen from 228.44 yen.
In early trading, the greenback plunged to 113.85-86 at one point.
"Players in Tokyo turned to U.S. dollar-selling following the plunge in U.S. stocks overnight," said Masaki Fukui, senior market economist at Mizuho Corporate Bank's forex division.
Overnight on Wall Street, U.S. shares took a heavy pounding on more bad news about the health of the world's largest economy.
The U.S. housing sector has been beset by defaults by "subprime" customers, who had patchy credit histories but received loans anyway.
The trouble has raised fears of a credit crunch as banking groups and other institutions rush to contain their losses.
"Now, the focus has shifted from the subprime loan itself to a possibility of a real credit crunch in the United States," Fukui said. "The market is very fluid," he said. "It would be no surprise if the yen advances even further against the U.S. dollar if additional news on the U.S. economy emerges anytime in the future."


Updated : 2021-06-20 09:45 GMT+08:00