22 March 2002, 09:22 Forex - Dollar top-heavy in midafternoon Tokyo on US forex policy concerns
TOKYO (AFX-ASIA) - The dollar was top-heavy against the yen in
midafternoon trade due to concerns over the sustainability of a strong
dollar policy in the US, dealers said.
The National Association of Manufacturers and the AFL-CIO have
jointly called the Bush administration to shift its strong dollar
policy.
However, Treasury Department spokesman Tony Fratto said the US
government's strong dollar policy remains unchanged.
"As Secretary O'Neill has said in the past, we have a strong dollar
policy, it's constant, it's consistent, and there's no change in
policy," Fratto told reporters.
Bank of Yokohama foreign exchange assistant manager Hiroshi
Ishihara said local market players are eagerly waiting to see how
European players respond to the joint call from the US manufacturers
and the comments from the US Treasury Department.
"Despite the growing pressure from manufacturers, however, the US
government is not likely to announce openly a shift in the policy,
given the experience that the previous shift in the foreign exchange
policy caused sharp rises in long-term interest rates there," he said.
The dollar, however, is expected to remain solid against the yen in
the next week thanks to disappointment over policy management by the
Japanese government, dealers said.
"There is no better additional measure than (an early passage of)
the budget" for next year, Prime Minister Junichiro Koizumi said in
South Korea.
His comments came four days after the Liberal Democratic Party
policy head Taro Aso urged the government to take further measures to
combat deflation, warning the recovery in the stockmarket would lose
steam without it.
"Such remarks will not help increase capital inflows into the
Japanese markets," Ishihara said, adding that the US currency is likely
to move firmly in the 131-134 yen trading range next week on improved
supply and demand conditions.
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