TOKYO: The dollar clawed back most losses on Wednesday in Asia after it slumped in response to the International Monetary Fund (IMF) cutting its growth forecast for the global economy.
In Tokyo late afternoon trade, the greenback strengthened to 108.50 yen from 108.02 yen in New York, but it was still below the 108.57 yen in Tokyo earlier Tuesday. It had hit a six-year high above 110 yen last week.
Daiwa Securities chief forex analyst Yuji Kameoka said the dollar may be set for another
fall to the 106-yen level, telling Dow Jones Newswires: “The US dollar remains too high when compared with weakness in stock and bond yields.”
The euro weakened to $1.2628 from $1.2667, while it was slightly up at 137.00 yen against 136.84 yen in New York.
Jittery investors moved into the yen—a safe-haven in times of uncertainty—after the IMF on Tuesday lowered its 2014 global growth estimate to 3.3 percent from the 3.4 percent tipped in July, warning of stagnation in advanced economies.
It forecast 2015 growth of 3.8 percent, against 4.0 percent previously.
The Fund’s latest World Economic Outlook highlighted increased risks from the crisis in Ukraine, ongoing Middle East woes and the spread of Ebola.
Adding to the grim picture, fresh data on Tuesday showed industrial production in Germany, the eurozone’s biggest economy, slumped 4.0 percent in August. That came a day after separate figures showed the country’s factory orders dived 5.7 percent in the same month.
Investors are now awaiting the release later in the day of minutes from the US Federal Reserve’s September policy meeting for clues about when it will start raising interest rates.
The “minutes today could be key in determining the next dollar move, and more hawkish comments could well put the momentum back in some further greenback strength,” Credit Agricole said.
The dollar mostly firmed against other Asia-Pacific currencies.
It rose to Sg$1.2801 from Sg$1.2774 on Tuesday, to 32.65 Thai baht from 32.58 baht, and to 1,073.75 South Korean won from 1,069.13 won.
The dollar also climbed to 12,259.00 Indonesian rupiah from 12,198.50 rupiah, to 61.49 Indian rupees from 61.41 rupees. It was flat at Tw$30.43.
The Australian dollar slipped to 87.59 US cents from 87.60 cents, while the Chinese yuan bought 17.68 yen against 17.74 yen.