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TOKYO: The dollar edged lower in Asian trade Friday as dealers sat
on their hands ahead of next week’s Federal Reserve meeting, which
could yield clues on prospects for higher US interest rates.
The dollar slipped to 107.88 yen in Tokyo
afternoon trade from 107.97 late Thursday in New York.
The euro rose to $1.5528 from 1.5503 and was
unchanged at 167.47 yen.
“Trading remains directionless as indicators
to gauge the health of the US economy have continued to show mixed
results,” said Yosuke Hosokawa, head of the forex group of Chuo
Mitsui Trust Bank.
“The market has already shifted its focus”
to next week’s Fed meeting, he said.
The US central bank is scheduled to hold a
meeting on Tuesday and Wednesday. Fed chief Ben Bernanke has
signalled that the central bank may shift to an inflation-fighting
stance in view of soaring energy and food prices.
But there are doubts in the market about the
chances of a series of interest rate rises by the Fed this year
given ongoing worries about the health of the US financial sector
and the wider economy.
Traders expect the European Central Bank to
raise its bench-mark lending rate next month, but views are divided
on prospects for a series of hikes.
“The European Central Bank is predicted to
increase interest rates in July, but voices are split on whether
this will be a one-off event or the start of a tightening cycle,”
Yuzo Sakai, forex manager at Tokyo Forex and Ueda Harlow, told Dow
Jones Newswires.
“Until this is clear, it will be difficult to
tell the direction of the euro against the dollar,” he added.
With the market focused on prospects for
interest rate rises in the United States and the eurozone, the yen
may struggle, traders said. Investors generally prefer the
currencies of countries offering higher yields.
“The yen is definitely lagging behind the
other major currencies, since there is no indication at all that the
Bank of Japan will be hiking rates any time soon,” said Sakai.
Against regional Asian cur-rencies, the dollar
rose to 1.3682 Singapore dollars from 1.3671 on Thursday, to 1,027.6
South Korean won from 1,025.8 and to 33.51 Thai baht from 33.40.
But it fell to 30.34 Taiwan dollars from 30.40,
to 44.36 Philippine pesos from 44.40 and to 9,260 Indonesian rupiah
from 9,287.
-- AFP
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