13 September 2001, 09:51 Forex - Dollar lower in midafternoon Tokyo, downside firm on intervention talk
TOKYO (AFX-ASIA) - The dollar turned lower against the yen and
other major currencies in midafternoon trade as sentiment towards the
US unit again faltered, after having stabilised earlier this morning,
following the multiple terrorist attacks in the US, dealers said.
They said major currencies moved in a tight range as investors
await how the US markets will react after the attacks.
"The news about the terrorist attacks ... basically reduced trading
interest among investors," MCM Asia Pacific forex analyst Hiromi
Ookawara said.
Dealers said weak sentiment towards the dollar will continue for
the time being, but with the US unit's downside well-supported by
intervention fears.
Earlier, local media reported Deputy Finance Minister for
International Affairs Haruhiko Kuroda as saying major developed
countries are ready to take further action in the forex market if
necessary.
Ookawara said the dollar may test the 118.3 yen level in the coming
week.
He also said there is speculation today in the forex market that
the Federal Reserve would make an emergency rate cut.
"There is a speculation that the Fed will hold a news conference
today about an emergency rate cut. But it seems it is only a rumour,"
Ookawara said.
He said investors are focusing on the policy board meeting by the
European Central Bank later today, the monetary policy meeting by the
Bank of Japan next week, and a possible G7 meeting scheduled for the
end of this month.
"The ECB, the Fed and the BoJ (injected) large amounts of capital
into the financial markets to increase liquidity. If confusion in the
market continues, it is likely that the G7 will launch a policy to cope
with it," Ookawara said.
"If we consider the current emergency situation, it is possible
that the BoJ as well as the ECB will decide to ease their monetary
policy," he said.
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