Yen falls against greenback on concern of June 25 polls
Yen falls against greenback on concern of June 25 polls
HONG KONG (AFP): Concerns over Japan's financial sector and political uncertainties ahead of the June 25 general elections led to yen falls against the dollar as other regional currencies posted mixed performances
The Japanese yen lost ground during the week amid concerns about Japan's financial sector and uncertain political moves ahead of the June 25 elections, dealers said.
The Japanese unit traded at 108.61 against the dollar compared with 107.44 a week earlier.
It held firm against the dollar earlier in the week amid improving unemployment figures, dealers said.
Japan announced Tuesday its unemployment rate fell slightly to 4.8 percent in April from the previous month's post-war record high of 4.9 percent.
However, the yen fell after the collapse of a life insurer triggered concern over Japan's financial sector, dealers said.
"Concern over Japan's financial sector has been dragging down the yen," said Fuji Bank dealer Hideyuki Tsukamoto.
Investors were wary after Daihyaku Life Insurance Co. collapsed on Wednesday, he said.
The election too added to foreign investor concern, another dealer said.
"Political uncertainty has eroded foreign investors' sentiment over Japan, but it will not pose a tangible downside risk on the economy," Bank of Tokyo-Mitsubishi chief analyst Koji Fukaya said.
Prime Minister Yoshiro Mori, defying a dramatic plunge in his popularity, dissolved parliament Friday.
There were positive signs for the Australian dollar but much still depends on its U.S. counterpart in the week ahead, brokers said.
"There are some positives for the Aussie in the shape of an improving trade balance, strengthening world growth and the upward trend for commodity prices," said Colonial State Bank's Craig James.
Additional U.S. rate hikes could weaken interest in the U.S. dollar, throwing a lifeline to the Australian dollar.
The local currency closed the week at 57.14 U.S. cents from 57.07 U.S. cents the week before.
On the Reserve Bank's Trade Weighted Index it was at 51.4 point the same as the previous week.
The New Zealand dollar ended the week at 45.59 U.S. cents up from 45.33 U.S. cents the previous week.
"It was a very quiet day with a tight range," a currency dealer said. "The kiwi is basically going to be stuck in a 45.60 - 46.00 cent range until something drastic happens," the dealer said.
The Hong Kong dollar was trading at 7.7921-7.7924 to the U.S. dollar Friday, down on the previous week's 7.7917-7.7922.
The Singapore dollar firmed to 1.7275 against the U.S. dollar on Friday from 1.7332 a week earlier.
Despite Singapore's strong economic fundamentals, dealers said investor uncertainty surrounding regional economies could result in the currency facing selling pressure.
The Taiwan dollar was marginally higher against the greenback over the week closing at 30.803 on Saturday as the local currency regained momentum following weakness earlier in the week, dealers said.
The Philippine Peso closed at 42.47 pesos to the dollar on Friday slightly higher than 42.72 pesos the previous week.
The South Korean won strengthened from 1,136.5 won to the dollar a week earlier to 1,125.20 won Friday after foreign investors returned to the bourse as uncertainties over the credit crunch faced by the Hyundai Group showed signs of abating. The won is likely to keep strengthening as foreign investors appear ready to buy more shares, dealers said.
The Indonesian rupiah closed Friday at 8,485 to the dollar, slightly weaker than last week's close of 8,455 to the greenback, after falling as low as 8,700 late last month amid violent student protests.