Yen stands firm amid U.S. interest rate fears

Yen stands firm amid U.S. interest rate fears

HONG KONG (AFP): The Japanese yen steadied against the dollar
during the week, in line with the euro, after the European
Central Bank (ECB) decided to keep interest rates unchanged.

Other Asian currencies were generally down due to continued
fears of further U.S. interest rate hikes. Rioting in Indonesia
and continued security concerns in Philippines led to falls in
the Rupiah and the Peso respectively.

The Japanese yen firmed against the dollar during the week in
line with the euro's rebound against the U.S. currency, dealers
said.

The yen traded at 107.44 to the dollar in Tokyo late Friday,
up from 107.85 a week earlier.

The Japanese currency rose to the 106 level on Monday as
speculations mounted that the Bank of Japan would soon end its
low-interest rate policy.

It traded in a narrow range Tuesday after falling back to
107.10 in New York trading the previous day.

The yen continued to move narrowly until Thursday as investors
receded to the sideline ahead of the ECB council meeting.

The ECB left its rates unchanged in Thursday's meeting, but
investors expected a rate hike in future meetings, dealers said.

"Many investors are predicting the ECB may raise interest
rates when they meet next time after leaving them unchanged this
time," said Fuji Bank dealer Yoshiyasu Naruse.

With little in the way of stimulus, the Australian dollar
looks set to maintain its level of around 57 US cents in the week
ahead.

"I think the market would be wary of pushing the Aussie too
far," said AMP Asset Management senior portfolio manager Chris
Loong.

"There's likely to be sellers coming in around 57.70, and
we're talking technical resistance around 57.80."

The local currency closed the week at 57.07 US cents from
57.42 US cents the week before.

Colonial State Bank economist Craig James said much still
depended on interest rate uncertainty although softer data this
week added to expectations the central bank will not raise rates
when it meets next month.

On the Reserve Bank's Trade Weighted Index it was at 51.4
points from 52.0 previously.

The New Zealand dollar closed Friday at 45.33 US cents down
from 46.50 US cents the previous week.

The kiwi traded in light flows Friday, a currency dealer said.

"It's been a pretty quiet day today -- the kiwi has traded in
a range between about 45.26 US cents and 45.65 US cents."

Another forex dealer said the New Zealand dollar had followed
the Australian dollar on a gradual downward slide, but said the
market had lost some of its nervousness.

The Hong Kong dollar was trading at 7.7917-7.7922 to the US
dollar Friday, down on the previous week's 7.7908-7.7902.

The Singapore dollar depreciated to 1.7332 against the US
dollar Friday from 1.7269 on May 20 on continued expectations
that US interest rates will move higher, dealers said.

The Taiwan dollar declined 0.4 percent against the dollar over
the week to close at 30.808 on Friday due to the strength of the
US dollar in the international market and Taiwan's weaker stock
market, dealers said.

The currency stood at 30.709 Monday weakening to 30.824
Wednesday before recovering slightly to 30.813 Thursday.

The Philippine peso ended the week lower at 42.72 to the
dollar from 41.67 the previous week. The peso had hit a new 19-
month low of 43.40 on Thursday due to security concerns and fears
of more US interest rate hikes.

The South Korean won further weakened from 1,122.70 won per
dollar a week ago to 1,136.5 won Friday, reflecting uncertainties
in money markets worsened by concerns over the credit crunch
faced by the Hyundai Group.

"If market jitters continue, the dollar-won exchange rate may
reach 1,150 won to the greenback," a dealer at the Korea Exchange
Bank said.

The Indonesian rupiah closed at 8,455 to the dollar Friday
slightly weaker than last week's close of 8,450 after falling as
low as 8,560 earlier in the day because of violence in Jakarta.

Trading in the Thai baht last week was in line with regional
currencies, particularly the Philippine peso, following the sharp
fall of the Bangkok bourse, dealers said.

The Thai stock exchange tumbled 8.8 percent, or 30.32 points,
over the week.

The Thai unit closed Friday at 39.07-13 baht to the dollar
compared to the previous week's close of 38.97-39.00.