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Dollar recovers against euro in Asian trade

By Agencies

The dollar continued to recover ground against the euro in Asian trade on Thursday but was flat against the yen in quiet trade with Japan closed for a public holiday, dealers said.


In morning trading, the euro traded at $1.5585, down from $1.5618 in late US trade on Wednesday while the greenback changed hands at ¥99, little changed from ¥99.01 overnight.


Japan's financial markets are closed on Thursday and will reopen on Friday.


The euro surged to a lifetime high of $1.5905 dollars on Monday while the dollar fell to a 12-year low of ¥95.75, also on the same day, a bottom not seen since September 1995.


Since then, the dollar has recovered against the euro and yen after the US Federal Reserve slashed its base federal funds rate by three-quarters of a point to 2.25 per cent in a bid to ease a growing credit crisis that is threatening to freeze up financial markets.


The dollar's rebound is however seen as likely to be short-lived because of continued worries about the fallout from the US housing market meltdown, despite the Fed rate cut.


"The Fed still needs to cut rates. I'm not convinced that the bottom for the dollar has occurred," said Richard Grace, chief currency strategist with the Commonwealth Bank of Australia in Sydney.


World financial markets remain jittery over the global credit squeeze which has already sunk US investment bank Bear Stearns and British retail bank Northern Rock.


Some analysts predicted the Bank of England would lower interest rates by 50 basis points at its monetary policy committee meeting next month.


"Given the recent turmoil in financial markets it now appears that the BoE will be much more likely to ease at the next MPC meeting in April," said Boris Schlossberg, senior currency strategist at Forex Capital Markets. (AFP)