Dollar gains sharply on drop in Japanese confidence
October 3, 2005
Tokyo - The dollar climbed to its highest level for over a year against the yen on Monday as a key survey of Japanese business confidence fell short of market expectations, dealers said.
The dollar rose to ¥114.13 in late morning Tokyo trade, up from ¥113.56 before the release of Tankan survey and from ¥113.46 in New York Friday.
The last time the US currency was so high was in May 2004, dealers said.
The euro fell to $1.1972 from $1.2023 in New York and to ¥136.42 from ¥136.48.
Business confidence at large Japanese manufacturers in the three months to September rose to plus 19 from plus 18 in the June quarter report, according to the Bank of Japan's quarterly Tankan survey.
"The Tankan headlines fell short of very bullish expectations," Merrill Lynch's chief economist for Japan, Jesper Koll, wrote in a research report.
Analysts had on average expected a figure of plus 20 but many investors appeared to have been betting on an even sharper increase. A positive reading means that confident firms outweigh pessimistic ones.
Kikuko Takeda, currency analyst at Bank of Tokyo-Mitsubishi, said that the Tankan survey was "a trigger for the dollar buying" but also noted that the US unit had risen against a range of currencies.
"The impact of the Tankan was neutral and it was not necessarily a factor to dampen the assessment of the recovery of Japanese economy," said Takeda.
Meanwhile the Indonesian rupiah fell sharply against the dollar after deadly blasts on the resort island of Bali killed at least 26 people and wounded more than 120 in attacks which the Jakarta blamed on suicide bombers linked to Al-Qaeda.
In early morning deals the rupiah was quoted at 10 400/10 450 to the dollar, weakening from Friday's level of 10 280/10 300.
"The bomb blast plus the weak yen will cause sentiment (towards the rupiah) to deteriorate," an analyst with BNI Treasury Research said. - AFP
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