Yen hits three week high, despite U.S. interest hike
Yen hits three week high, despite U.S. interest hike
HONG KONG (AFP): Despite initial falls following Tuesday's U.S. interest rate rise, the Japanese yen rallied to a three week high on talk of the country's central bank lifting its "zero- rate" policy.
Other Asian currencies suffered mixed reactions to the U.S. Federal Reserve's announcement, with the Thai baht and South Korean won slipping back, while Indonesian rupiah received a boost from the signing of a new letter of intent with the IMF.
The Japanese yen bounced back against the dollar after falling on the U.S. Federal Reserve's decision Tuesday to raise interest rates by half a percentage point to curb the growing U.S. economy.
It stood at 107.85 to the dollar late Friday, up from 108.29 a week earlier.
The yen rallied to a three-week high on Friday after Bank of Japan (BOJ) governor Masaru Hayami said signs of economic recovery were leading BOJ towards lifting its "zero-rate" policy.
An Industrial Bank of Japan dealer said only "limited room" for upward yen movement existed because of "many anxieties including a weak Nikkei stock average trend."
The yen slumped to 109.32 Wednesday after the U.S. interest rate hike, improving on Thursday as market traders refrained from testing the 110 mark despite the widening differential between Japanese and U.S. interest rates.
The Australian dollar is in for a torrid week and needs strong words from the central bank to steady it, dealers said.
"The currency and this market needs the steadying influence of a respected voice," said Scott Young, chief dealer at Arab Bank.
"I am very, very, surprised at their silence."
Reserve Bank governor Ian Macfarlane faces the Parliamentary Committee on Banking and Finance, to deliver his semi-annual testimony and answer questions from politicians, probably on the need for an interest rate rise.
At the close of trading Friday the local currency was at 57.42 U.S. cents, from 57.91 the week before.
On the Reserve Bank's Trade Weighted Index it was at 52.0 points, from 52.2 previously.
The badly battered New Zealand dollar closed Friday worth 45.50 U.S. cents.
However the dollar found some respite from recent hammerings. In a very busy session involving two-way trade "the kiwi traded as low as 44.96 U.S. cents and as high as 45.67 U.S. cents and is closing towards the higher end of that range in the 45.50 U.S. cent area," Bank of New Zealand chief currency dealer Mike Symonds said.
The Hong Kong dollar was trading at 7.7908-7.7902 to the greenback on Friday, down on the previous week's 7.7891-7.7890.
The Singapore dollar appreciated slightly to 1.7269 against the U.S. dollar Friday from 1.7285 on May 12 boosted by stronger- than-expected first quarter economic figures, dealers said.
The Taiwan dollar slipped 0.1 percent over the week to finish at 30.695 against the U.S. dollar Saturday, in spite an inflow of foreign funds and intervention from the central bank, dealers said.
The unit stood at 30.767 Monday, strengthening to 30.690 Wednesday before losing ground again to end at 30.737 Thursday. The currency closed at 30.713 Friday.
The Philippine peso fell to 41.67 pesos to the dollar on Friday from 41.50 pesos to the dollar on May 12.
The local currency closed at a new 19-month low of 41.730 pesos to the greenback on May 18 before recovering a day later.
The South Korean won further weakened from 1,114.50 won per dollar a week earlier to close at 1,122.70 won Friday, reflecting strong demand for dollars in overseas markets.
Barring a strong buy of dollars by overseas non-delivery funds, the dollar-won exchange rate is likely to ease gradually in the week ahead, dealers said.
They cited continuing inflows from export earnings and a widespread belief that the dollar rose too fast over too short a period.
The Indonesian rupiah closed at 8,450 to the dollar Friday, fractionally firmer than last Friday's close of 8,480 to the greenback.
It was helped by Indonesia's signing of a new letter of intent with the International Monetary Fund (IMF), dealers said.
The Thai baht continued to fall against the dollar because of uncertainties over U.S. interest rates and weakness in regional currencies, dealers said.
The baht hit a seven-month low at 39.47 to the dollar in mid- week trading before rebounding Friday, boosted by overseas investors offloading their holdings of dollars.
The Thai unit closed Friday at 38.97-39.00 baht to the dollar, compared to the previous week's close of 38.84-88.