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  • Nov 7th, 2005
  • Comments Off on Asian currencies fall after fresh US rate hike
Asian currencies ended the week lower as the dollar gained strength following a further interest rate increase by the US Federal Reserve.

JAPANESE YEN: Japanese Yr lows of more than 117 yen against the dollar during the week as the market bet that the US Federal Reserve would stick to its policy of raising interest rates.

The Japanese currency was quoted at 117.64-69 yen to the dollar late Friday, down from 115.16-19 a week earlier.

The yen plunged to 117.73 yen - levels last seen in early September 2003 - at one point on Friday after the US Federal Reserve hiked its key interest rate earlier in the week, as expected, by a quarter of a percentage point.

"As the Fed's statement enhances the perception that interest rate differentials between Japan and the US will widen further, the dollar will continue to rise against the yen," said Yasuhisa Ishida, foreign exchange manager at Chuo Mitsui Trust and Bank.

Nobuaki Kubo, currency manager at Resona Bank, said Japanese share prices' advance to four-year highs helped the dollar rise.

"Investors usually want to invest in assets of their own countries to avoid risks but the higher stock prices have made (Japanese) investors' wallets fatter, enabling them to buy higher-yielding dollars," Kubo said.

Japanese share prices closed above the 14,000 points level Friday for the first time since May 2001 helped by strong corporate results and gains on Wall Street.

AUSTRALIAN DOLLAR: The Australian dollar is expected to continue to struggle against the greenback next week amid growing optimism about the US economy, dealers said.

At 5:00 pm Friday (0700 GMT) the Australian dollar was trading at 73.82 US cents, down almost two US cents on the previous week's 75.65 US cents.

Dealers said an interest rate hike by the US Federal Reserve had narrowed America's interest rate differential with Australia, putting downward pressure on the Aussie.

ANZ Investment Bank senior currency strategist Craig Ferguson said comments from the Fed chairman Alan Greenspan that the US economy has strong "forward momentum" would add to US dollar gains.

"There is a bit of optimism in regards to the US dollar going forward," he said.

Westpac strategists said there was a decent appetite to buy the Australian dollar around 73.5 US cents but they maintained a view that the currency risks breaking the lows for the year in the weeks ahead.

NEW ZEALAND DOLLAR: The New Zealand dollar ended the week at 68.78 US cents, sharply down from 70.76 the previous week.

The greenback rose after the Federal Reserve lifted interest rates during the week and sentiment towards the kiwi weakened after New Zealand central bank chief Alan Bollard said the currency was unjustifiably high and would fall.

CHINESE YUAN: The Chinese yuan closed at 8.0856 to the dollar Friday, the central bank said in a statement. That compared with a closing rate of 8.0840 a week earlier.

In accordance with its new policy, the State Administration of Foreign Exchange will take the closing price as the mid-point for the next trading day. The central bank allows a trading band of 0.3 percent either side of the mid-rate.

HONG KONG DOLLAR: The US-pegged Hong Kong dollar closed Friday at 7.753 compared with 7.754 the previous week.

INDONESIAN RUPIAH: The rupiah closed slightly weaker on Tuesday, the last day of trading ahead of the Eid-al-Fitr festival, exchanging at 10,080-10,110 to the dollar compared to 10,020-10,025 the previous Friday. Trading resumes on Wednesday.

PHILIPPINE PESO: The Philippine peso strengthened to 54.63 to the dollar on Friday from 54.94 to the dollar a week earlier.

SINGAPORE DOLLAR: The dollar was at 1.6994 Singapore dollars on Friday from 1.6874 the previous week.

SOUTH KOREAN WON: The won closed at 1,047.90 won to the dollar, compared with 1,042.30 won a week earlier, reflecting a global strengthening of the US currency.

A dealer with Kookmin Bank said the rise in the dollar-won exchange rate was expected to continue as a short-term trend because of the strong dollar but the net buying of stocks by foreigners and supply of dollar earnings by exporters would limit the rise.

TAIWAN DOLLAR: The Taiwan dollar closed slightly lower at 33.657 to the US dollar, compared with 33.606 a week earlier.

THAI BAHT: The baht slipped against the dollar over the past week as the greenback held firm on prospects of further US interest rate rises following the Federal Reserve's 12th successive hike, dealers said.

The Thai currency closed at 40.90-92 baht to the dollar on Friday, slightly down from 40.70-75 a week earlier.

Copyright Agence France-Presse, 2005


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