Euro edges up against major currencies in Tokyo trade

Published November 16th, 2000 - 02:00 GMT

The euro edged up against the dollar and the yen in Tokyo Thursday as investors sold the greenback on the US Federal Reserve's decision to leave interest rates unchanged, dealers said. 

 

The European single unit traded at $0.8588-91 around 5:00 pm (0800 GMT), up slightly from $0.8572 in New York, but down from $0.8627-30 in Tokyo late Wednesday. 

 

Against the yen, the euro was quoted at 93.42, up from 93.30 in New York and 93.05 yen in Tokyo late Wednesday. 

 

"As the FOMC (Federal Open Market Committee) took an inflation cautionary stance, and the US stock prices got weaker, investors sold the dollar and bought the euro," Bank of Tokyo-Mitsubishi dealer Kiyoshi Kuzuhara said. 

 

The FOMC meeting, coming in the midst of deepening political uncertainty and amid signs of flagging economic growth, on Wednesday, November 15, voted as expected to keep its benchmark federal funds rate at 6.5 percent. 

 

Shares on Wall Street gave up early gains Wednesday, after a warning on inflation from the Fed was interpreted as signaling that the current cycle of monetary tightening was not yet over. 

 

The policy-making governing council of the European Central Bank is due to meet Thursday. 

 

"Investors are very wary of possible intervention so they could not sell the euro much," Sanwa Bank dealer Mitsuru Sahara said. 

 

Research institute IDEAglobal.com said in Singapore that "with the constant threat of ECB intervention in the background, traders are unwilling to take on aggressive short positions without good orders backing them." 

 

DBS Group Holdings Ltd. said, however, that the ECB was unlikely to raise interest rates. 

 

"Further rate hikes would be bad for the euro. With the market now highly concerned about Euroland's growth prospect, hiking rates would prompt the market to further selldown the euro," it said in a report. 

 

The dollar meanwhile bought 108.73-76 yen at 5:00 pm, compared with 108.82 yen in New York and from 108.05-08 yen in Tokyo late Wednesday. 

 

"There was no lead (for dollar-yen trade) today," Sahara said. 

 

However, the yen could come under pressure to be sold against the dollar on uncertainty amid Japanese political turmoil, as Prime Minister Yoshiro Mori faces a mounting challenge to his leadership, Kuzuhara said. 

 

In late Singapore trade, the US dollar rose to 49.91 Philippine pesos from 49.78, to 43.87 Thai baht from 43.56 and 9,386.00 Indonesian rupiah from 9,367.5. 

 

The greenback also advanced to 1,136.66 South Korean won from 1,133.49, to 1.7486 Singapore dollars from 1.7437 and 32.22 Taiwan dollars from 32.18.— (AFP)  

 

© Agence France Presse 2000  

© 2000 Mena Report (www.menareport.com)

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