Dollar steady as market awaits US call on rates
October 31, 2005
Tokyo - The dollar was rangebound in Asian trade on Monday as the market took a cautious stance on the eve of a Federal Reserve meeting expected to bring another rise in US interest rates, dealers said.
They said there seemed little reaction in afternoon trade to reports of a cabinet reshuffle by Japanese Prime Minister Junichiro Koizumi given there appeared to be no immediate surprises.
Press reports said Shinzo Abe, a hawkish 51-year-old seen as a potential successor to Koizumi, had been named to the powerful post of chief cabinet secretary.
Abe, the grandson of former prime minister Nobusuke Kishi, is known for his tough line on North Korea over its abductions of Japanese citizens.
The dollar was quoted at ¥115.62 in Tokyo afternoon trade, little changed from ¥115.66 late on Friday in New York.
The euro slipped to $1.2056 from $1.2068 and to ¥139.43 from ¥139.60.
The US currency ended last week on an upbeat note after data showed the US economy expanded at a better-than-expected annual rate of 3.8 percent in the third quarter.
Dealers said the market had been cautious ahead of the cabinet reshuffle but most attention was on the Fed meeting Tuesday.
Tetsuya Aida, currency dealer at Bank of Tokyo-Mitsubishi, said: "Traders are waiting for the decision of the FOMC (US Federal Open Market Committee), which is expected to announce another (interest rate) hike."
He said the market was "carefully watching US economic sentiment", with fresh clues on the health of the world's largest economy due on Friday in the form of the October US non-farm payrolls employment report.
The yen fell to a two-year low against the dollar last week as rising returns on US assets and prospects of further US interest rate hikes continued to attract capital inflows.
By contrast the Bank of Japan left its policy of near-zero interest rates unchanged later Monday.
"Expectations of widening interest differentials between Japan and the US will continue to support the dollar against the yen going forward," said Sumitomo Trust and Banking Co customer dealer Norihiro Takemura.
"Japanese retail investors are now showing strong interest in investing in high-yielding offshore assets," Takemura said.
In afternoon trading, the dollar fell to 54.93 Philippine pesos from 55.05 on Friday and to 1 043.1 South Korean won from 1 043.6.
It rose to 1.6919 Singapore dollars from 1.6874, to 33.624
Taiwan dollars from 33.623, to 40.775 Thai baht from 40.76 and to 10 050 Indonesian rupiah from 10 010. - AFP
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