Well Fed may wait ..than recession would hit even sooner...
Dollar ends mixed as yen rallies broadly
06:19 p.m Sep 01, 1998 Eastern
By Chris Stetkiewicz
NEW YORK (Reuters) - The dollar ended lower against the Japanese yen Tuesday after Malaysian foreign exchange controls and a sharp rally in Tokyo stocks boosted many PacificRim currencies.
The greenback slumped against European currencies in early trade but later bounced back as U.S. stocks powered higher and eased speculation that the Federal Reserve might soon lower official interest rates.
The Malaysian ringgit rose 3.9 percent against the dollar after the Malaysian central bank halted offshore ringgit trading.
Meanwhile, a rally in Japan's stock market, where the Nikkei 225-share index rose 1.86 percent, helped boost the yen broadly, dragging the Canadian and Australian dollars higher as well.
Japanese investors continued to unload dollars to shore up their domestic equities portfolios, which have suffered under a sharp recent slide on the Nikkei, currency traders said.
But the dollar rebounded somewhat from a 10-week low against the yen as investors, mindful of Japan's prolonged economic slump, bought the greenback on the cheap.
''You're seeing some capital repatriation to Japan and dollar position liquidation. But fundamentally, do you want to own yen? As an investor, no,'' said Seth Garrett, global head of spot currency trading at Credit Suisse First Boston.
The Dow Jones industrial average rose 288.36 points, or 3.8 percent, erasing much of Monday's 6.4 percent loss. Equity market stability reduced the odds that the Fed would cut interest rates, which typically hurts the dollar, traders said.
''The dollar was sold recently on fears the Fed would cut rates in response to a global stock market crisis. We're not expecting that as much right now,'' said one dealer at a U.S. investment bank.
The dollar ended lower at 136.32 yen from 140.04 yen at Monday's close. The dollar rose to 1.7503 German marks from 1.7472 marks and rose to 1.4425 Swiss francs from 1.4340 Swiss francs. The British pound fell to $1.6748 from $1.6805. The dollar fell to Canadian $1.5520 from Canadian $1.5700. The Australian dollar rose to $0.5820 from $0.5686/91.
Copyright 1998 Reuters Limited |
