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Dollar moves narrowly near 104 yen line in Tokyo morning deals.

TOKYO, April 30 Kyodo

The U.S. dollar traded in a narrow range near the 104 yen line Wednesday morning in Tokyo amid a tentative mood before the U.S. Federal Reserve's monetary policy decision to be revealed later in the day.

At noon, the dollar was quoted at 104.09-14 yen against 103.97-104.07 yen in New York at 5 p.m. Tuesday and 104.56-58 yen late Monday in Tokyo. Japanese financial markets were closed Tuesday for a national holiday.

The euro was quoted at $1.5568-5573 and 162.02-07 yen, against late Tuesday's quotes of $1.5566-5576 and 161.90-162.00 yen in New York and late Monday's quotes of $1.5632-5634 and 163.45-49 yen in Tokyo.

The dollar inched up from the upper 103 yen range to the lower 104 yen level in the morning. But overall trading activity in Tokyo was rather light, with many investors reluctant to lean in one direction before the Federal Open Market Committee's policy decision.

''In addition to the Fed's policy decision, whether the central bank will signal a halt in the recent round of rate reductions in its post-meeting statement is drawing great attention,'' said Yasutoshi Nagai, chief economist of the fixed income, currency and commodities research department at Daiwa Securities SMBC Co.

Many investors had expected the Fed would conduct an aggressive interest rate cut of about half a percentage point until a few weeks ago.

But such views have receded in tandem with easing concern about the global credit crunch, dealers said, adding that market participants now widely expect the central bank will slash its key interest rate only a quarter percentage point.

Dealers added that activity on the Tokyo market remained quiet as many currency traders are absent from trading due to Japan's Golden Week holidays.

Some weak U.S. housing-related figures were released Tuesday, which proved that ''the underlying cause of the U.S. mortgage market meltdown still hasn't been resolved,'' said Masafumi Yamamoto, head of foreign exchange strategy in Japan at the Royal Bank of Scotland.

But such poor data was mostly ignored in Tokyo morning deals as investors already expected the fundamentals of the U.S. economy would remain weak for the time being, dealers said.
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Publication:Japan Weekly Monitor
Date:May 5, 2008
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