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TOKYO: The dollar slipped against the yen in Asian
trade Tuesday on fresh worries about the health of US mortgage
giants, dealers said.
But the greenback rose against
the euro on fears of a deterioration in German business sentiment.
The dollar eased to 110.00 yen in
Tokyo afternoon trade from 110.09 in New York late Monday. The euro
fell to $1.4679 from 1.4696 and to 161.51 yen from 161.83.
Currency markets took their cue
from a slump on Wall Street after a report that mortgage finance
giants Fannie Mae and Freddie Mac were in need of a government
bailout, dealers said.
Another report that US investment
bank Lehman Brothers would post a loss of $1.8 billion for the third
quarter added to market worries that the credit crunch is far from
over.
The yen tends to benefit from
jitters on the financial market because it is often used to fund
risky trades.
But some market watchers
predicted the yen’s rebound would be short-lived.
“The dollar’s recent rise was
driven mainly by falls in oil prices,” Minoru Shioiri, senior
forex manager at Mitsubishi UFJ Securities, told Dow Jones
Newswires.
“But because the majority view
is that there is more room for falls in oil prices, the dollar’s
current fall is only a correction and it’s expected to resume
rising again.”
Traders showed little reaction to
a decision by the Bank of Japan to leave its key interest rate on
hold at 0.5 percent as it downgraded its assessment of Asia’s
largest economy, predicting continued “sluggish” growth.
“The grimmer view may prompt
some players to start speculating [about] a higher possibility of a
rate cut down the road,” said Tohru Sasaki, chief foreign-exchange
strategist at JP Morgan Chase in Tokyo.
“But because interest rate
differentials [between countries] are not a trading factor right
now, such speculation would have little impact.” 
--AFP
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