The dollar gained ground in Asia on Friday as stock prices recovered from volatility after Washington pressed forward a stimulus plan aimed at heading off recession in the world's biggest economy.
The dollar rose to ¥107.43 (Dh3.65) in Tokyo afternoon trade, up from ¥107.16 (Dh3.64) in New York on Thursday.
The euro fell to $1.4737 (Dh5.379) from $1.4756 (Dh5.386). The single European unit changed hands at ¥158.36 (Dh5.384 compared with ¥158.14 (Dh5.378).
Dealers said the return of stability on equities markets supported the US currency and that the dollar was looking for a comfortable range to settle in.
"Investors still cannot be perfectly convinced that stock prices won't tumble further, but the direction of the market was fixed after the US Fed and government made their positions clear," said Yuya Koike, a forex dealer of Hachijuni Bank.
Following the Federal Reserve's dramatic three-quarters of a percentage point rate cut, the US Congress on Thursday pressed forward a quickly crafted stimulus plan of some $150 billion (Dh547.5 billion).
The plan is aimed at staving off recession with tax rebates and other measures including business tax breaks, in the face of what appears to be a rapidly deteriorating economic backdrop that has sent the world's stock markets into near-panic.
"Now the stock prices will bottom out and help the dollar gain ground against the Japanese and European units," Koike said.
Hideaki Inoue, chief manager at forex trading for Mitsubishi UFJ Trust and Banking Corp, also said: "The Japanese currency moves closely on the tail of stock prices. The direction in the market is now set for a lower yen against the greenback."
"The Japanese unit may even hit the 110 level next week," he added.
Investors were now looking ahead to the Fed's scheduled January 29-30 meeting amid expectations it will cut rates again by possibly 50 basis points, the dealers said.
"We expect the Fed would go for a cut of half a percentage point," Inoue said. "As the United States is drawing out tax reduction measures, the worries in the markets will likely recede."
Koike said dealers were also watching the earning results to be reported by major European banks next week, particularly after it was exposed that a rogue trader at Societe Generale had lost $7.15 billion (Dh26.10 billion).
Earlier on the day, Japan reported a faster-than-expected 0.8 per cent rise for the December core consumer prices from a year earlier. It was the biggest rise in nearly a decade in an economy that has long struggled with deflation.
But dealers said the data had a limited impact on the market as the Bank of Japan is unlikely to raise interest rates anytime soon due to recent market turbulence.
The dollar was weaker or flat against other Asian currencies.
It fell to 1.4224 Singapore dollars (Dh.3.67) from SGD1.4294 (Dh3.69) on Thursday, to 946.4 South Korean won (Dh3.67) from KRW 949.20 (Dh3.68) and to 40.90 Philippine pesos (Dh3.67) from Php41.00 (Dh3.68).
It also declined to 9,345 Indonesian rupiah (Dh3.668) from IDR9,365 (Dh3.676) and to 31.46 Thai baht (Dh3.666) from THB33.07 (Dh3.853) while it remained unchanged at 32.30 Taiwan dollars (Dh3.67). (AFP)