Thursday morning in Asia, the Japanese yen eased from a 2 ½ -year high against the dollar, as it slipped to 109.19 against the dollar from 108.25 hit early Wednesday. Yesterday, the dollar-yen pair largely bounced around 108 throughout the New York session and closed the day's deals at 108.42. Apart from the dollar, the yen declined against its European counterparts too. Down from yesterday's close of 161.11 against the euro and 223.91 against the pound, the yen dropped to 162.29 and 225.71, respectively. The franc-yen pair moved to 99.09 by about 11:15 pm ET, compared to 98.43 late Wednesday in New York. Early Wednesday, the yen rose to an 8-month high against the pound, while it reached multi-day highs against the euro and franc. Increased concerns about the credit market losses and fears of global slowdown supported the unwinding of carry trades that boosted the lower yielding currencies like the yen and the franc in the recent weeks. Extending yesterday's uptrend, the Swiss currency strengthened against the dollar during the early deals on Thursday and hit a new record high of 1.1006 at 9:20 pm ET. The dollar-franc pair closed Wednesday's deals at 1019. Against the pound, the franc soared to a 16-month high of 2.0688 by about 11:00 am ET Wednesday, before it retreated. But the franc advanced again during the early trading on Thursday and fetched 2.2718 at 9:10 pm ET compared to yesterday's close of 2.2755. The primary up trend of the euro-dollar pair has remained intact since early 2002, as the greenback suffered due to the wider U.S. current account deficit and the series of interest rate cuts the Fed implemented following the stock market collapse in 2000. In the near term, the euro climb accelerated after the Fed lowered its discount rate in August 2007 and followed it up with an aggressive 50-basis point cut at its September meeting. On Thursday, the dollar plunged to a new record low of 1.4876 against the euro during the Asian deals. On Tuesday, the US Fed said that the housing slump, tighter credit conditions and high-energy costs would likely slow U.S. growth next year between 1.8 percent and 2.5 percent. The negative outlook on both the US and world economies is more pronounced than a month ago, in the light of housing crisis, credit crunches and soaring oil prices, the Global insight said in its November report on Wednesday. Japan's merchandise trade balance data released on Wednesday, showed that trade surplus rose 66.1% to 1.019 trillion yen in October from a year earlier, backed by strong exports to emerging markets and Asia. It marked the third straight monthly increase, signaling continued strength for exports despite the stronger yen. Analyzing the Japanese trade data for October, Danske bank noted that the development is in line with bank's expectation of sluggish pace of economic growth in the fourth quarter. In addition, Danske bank expects the Bank of Japan to stay pat on its key interest rate until mid 2008 given the slower growth. Further, the bank said the recent data did not impact the Japanese yen in the currency market.
November 22, 2007 3:18 AM