19 September 2001, 09:12 Forex - Dollar top-heavy in midafternoon Tokyo on receding effect of BoJ move
TOKYO (AFX-ASIA) - The dollar turned top-heavy in midafternoon
trading due to the receding impact of dollar-buying intervention
carried out this morning by the Bank of Japan on behalf of the Ministry
of Finance, dealers said.
The dollar was pushed to above the 118 yen level following the
intervention, which took place when the the unit neared the 117 yen
level.
But the US currency failed to extend its gains above the 118 yen
level due to a lack of follow-through buying amid growing concerns over
the future trend of the US economy and a US retaliation following
terrorist attacks on New York and Washington, dealers said.
Canadian Imperial Bank for Commerce foreign exchange director
Yasushi Takeishi said that with negative sentiment towards the US
currency remaining intact despite today's intervention, the dollar may
re-test the 117 yen level anytime soon.
"Solo intervention by the BoJ will not be able to reverse the
downtrend of the dollar," Takeishi said, adding: "unless joint
intervention by the Japanese and US authorities is carried out, it
would not be a surprise if the dollar falls to the mid-116 yen level."
Underlying worries over the smooth settlement of the dollar also
pressured the topside of the dollar ahead of the account book close for
the first half to September, dealers said.
"It seems that Japanese players are becoming increasingly reluctant
to trade in the dollar beyond their minimum requirements due to
concerns over the currency's liquidity problem," Toyo Trust and Banking
Co Ltd customer dealer Issaku Taguchi said.
"This is also pressuring the topside of the dollar."
Finance Minister Masajuro Shiokawa said his ministry aimed to boost
both the level of the dollar/yen and the liquidity of the yen -- which
can be viewed as a form of monetary easing -- through today's currency
market intervention.
The rebound in the Nikkei 225 index to above the 10,000 point level
also bolstered demand for the yen, dealers said.
The euro was easier against the dollar on profit-taking following
the recent rebound and the peaking of flight-to-safety asset flow,
dealers said.
"It would not be a surprise if the euro tests the 0.94 usd level,
just from chart analysis, but, in reality, it will take some time
before the European currency reaches such level," Taguchi said.
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