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Dollar hits near-17-month high against yen
10/14/2005
TOKYO, Oct 13 (AFP): The dollar rose to the highest level for almost 17 months against the yen today on signs that the US Federal Reserve plans to continue ramping up interest rates to try to rein in inflation, dealers said.
The dollar rose to 114.78 yen in afternoon Tokyo trade compared with 114.35 in New York late Wednesday. At one point the dollar reached 114.85 yen, the highest level since mid May-2004, dealers said.
The euro dipped to 1.1986 dollars from 1.2023 and rose to 137.64 yen from 137.52.
The dollar headed higher again as markets remained focused on prospects for US interest rates, which are already higher than in the eurozone and Japan, said Kikuko Takeda, currency analyst at Bank of Tokyo-Mitsubishi.
Higher interest rates mean increased returns on US assets, attracting foreign capital inflows that prop up the dollar, dealers note.
The Fed has been slowly removing its accommodative monetary policy, having lowered its benchmark rate steadily after the September 11 attacks in 2001 to historic lows of 1.0 per cent.
The dollar overcame nervousness ahead of a report on the US trade balance for August which was expected to show a widening of the deficit from July.
The report often pressures the dollar because it reminds the markets of the huge amount of capital flows needed to finance the US trade gap.
But analysts here said that the US trade deficit data was unlikely to have a significant impact on the currency market.
Japan earlier announced its current account surplus in August dropped 15.6 per cent from a year earlier to 1.215 trillion yen (10.6 billion dollars).
The market impact was limited as analysts had on average forecast a bigger fall to 1.173 trillion yen.
In early afternoon trade, the dollar rose to 10,138 Indonesian rupiah from 10,105 from the previous day, to 55.875 Philippine pesos from 55.848, to 1.6938 Singapore dollars from 1.6928, to 33.464 Taiwan dollars from 33.339 and to 1,047.6 South Korean won from 1,034.2.
The dollar declined to 40.97 Thai baht from 40.99.
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