Dollar steady in Asian trade
The dollar held steady well above its recent lows against other major currencies in Asian trade on Friday with many players away for a long holiday weekend, dealers said.
The dollar was changing hands for ¥99.43 in Tokyo morning trade, little changed from ¥99.37 in New York late on Thursday.
The euro dipped to $1.5425 from $1.5436 and to ¥153.32 from ¥153.39.
Investors appeared to be shifting funds out of commodity markets and the currencies of resource-rich nations and putting them in dollar-denominated assets such as stocks, said NTT Smarttrade director Takashi Kudo.
World oil prices briefly fell below $100 a barrel Thursday amid fears of a global slowdown in energy demand, traders said. Gold prices also plunged from recent record highs as traders fretted over long-term demand.
The dollar was well bid after a survey showed manufacturing activity in the Philadelphia area was better than expected and following a further easing in commodity prices, dealers said.
The Federal Reserve Bank of Philadelphia said its manufacturing index improved to minus 17.4 in March from minus 24.0 in February, better than the average market expectation of minus 20.0.
A negative number, however, still means that there are more companies in the region that see manufacturing activity decreasing than increasing.
The dollar's gains against the yen were capped as the US "subprime lending problem is far from over," said Kudo.
"Because investors have not relented in their risk-averse stance," he added, "they will continue to try to unwind carry-trade positions," he said.
"Thus, the yen is most likely to be the best outperformer among the major currencies," said Kudo.
A boom in risky carry trades in recent years saw speculators flock to take advantage of rock bottom interest rates in Japan to borrow cheap yen, which they then invested in higher yielding assets elsewhere.
But recent global market turbulence has triggered a reversal of such trades, pushing the yen sharply higher against the dollar and other currencies.
Activity was muted in Tokyo Friday as traders here returned from a public holiday on Thursday. Many overseas markets, including those in the United States, are closed on Friday for a holiday.
The dollar has clawed back following a slump earlier in the week amid credit crunch jitters and market turmoil. On Monday, the euro surged to a record peak of $1.5905 while the dollar fell to a 12-year low of ¥95.75.
A soft survey of activity in the eurozone manufacturing and services sectors weighed on the euro, dealers said.
The 15-nation eurozone's purchasing managers' index (PMI), compiled by NTC Research, slid to 51.9 points in March, compared to 52.8 points in February, according to a first estimate. (AFP)
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