Dollar weakens on Fed easing signs

2012-09-03 08:17

Tokyo - The dollar edged down slightly in Asian trade on Monday after US Federal Reserve chief Ben Bernanke hinted at further easing measures to boost the world's top economy.

The greenback bought ¥78.28 in Tokyo, from ¥78.31 in New York late on Friday.

The euro fetched $1.2578 and ¥98.50, from $1.2576 and ¥98.51 ahead of a European Central Bank (ECB) meeting this week.

Dollar-selling continued in Asia after traders pushed the unit lower in New York on Friday following Bernanke's keynote speech at a central banker summit in Jackson Hole, Wyoming.

Bernanke pointed to a stagnant US labour market as "a grave concern" and signalled he would push for easing measures -- which tend to weigh on the dollar - when the Fed's policy committee meets later this month.

"In the current market sentiment, it's difficult to support the dollar against the yen," said Teppei Ino, currency analyst at the Bank of Tokyo Mitsubishi UFJ.

"There won't be any surprise if the dollar temporarily falls below ¥78," Ino added.

Traders have repeatedly flocked to the Japanese currency as a safe-haven unit owing to turmoil in the eurozone and an unsteady US economic recovery.

But Japanese policymakers warned that the yen was overvalued and did not reflect the state of the lumbering Japanese economy, the world's third biggest.

The euro traded in a tight range as markets look to the ECB's policy meeting on Thursday.

Bank chief Mario Draghi will look to head off German-led resistance to the bank's anti-crisis measures, which include a possible restart to a bond-buying programme aimed at cutting borrowing costs for crisis-hit nations.

Germany, Europe's biggest economy, has warned against the measures, saying it could let them avoid painful but necessary austerity cuts.

The dollar was mostly weaker against other Asia-Pacific currencies.

It fell to Sg$1.2475 from Sg$1.2522 on Friday, to 55.42 Indian rupees from 55.69 rupees and to 1,130.90 South Korean won from 1,133.70 won.

The greenback also dipped to 31.26 Thai baht from 31.38 baht, to 42.03 Philippine pesos from 42.21 pesos and to Tw$29.88 from Tw$29.94.

It rose to 9,586 Indonesian rupiah from 9,567 rupiah.

The Australian dollar fetched $1.0260 against $1.0301, while the Chinese yuan bought ¥12.34 against ¥12.35.

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