TOKYO:The dollar remained below 121 yen in Asian trade on February 1 as players grew wary of selling the Japanese currency ahead of next week’s meeting of Group of Seven finance chiefs, dealers said.
Overnight, US Treasury Secretary Henry Paulson said he was closely watching the yen’s recent slump, fueling speculation that the Japanese currency will be a key focus at the meeting of G7 finance ministers in Germany.The dollar rose to 120.72 yen in Tokyo afternoon trade from 120.66 yen in New York late on January 31, when it had fallen sharply, but was still well off Monday’s four-year high above 122 yen.The euro was steady at 1.3031 dollars and rose to 157.34 yen from 157.25.
Cautious trading was expected to continue ahead of the G7 meeting, said Hideaki Inoue, chief manager of forex and financial products trading at Mitsubishi UFJ Trust and Banking Corp. “Players see difficulties in selling the yen right now after Paulson and others showed concern about a weak yen but fundamentals, such as interest rate differentials, remain unchanged,” he said.
“Once the G7 meeting is over, yen-selling pressure is likely to re-emerge.”Paulson said on January 31 he was watching the slumping value of the yen “very, very closely” when asked whether Tokyo was depressing its currency’s value to gain an unfair trading edge.
But Paulson told the Senate banking committee that there had been no physical market intervention by the Japanese authorities since March of 2004 and no verbal comments by Japanese officials in almost a year.The yen’s slide to record lows against the euro has also caused disquiet in the eurozone.Earlier this week Luxembourg Prime Minister Jean-Claude Juncker, who currently chairs eurozone finance ministers meetings, said that the yen’s exchange rate should reflect Japan’s economic growth.
The yen’s renewed weakness came after the Bank of Japan left interest rates on hold last month, when many analysts had been predicting a hike. The decision by the Federal Reserve to leave US rates unchanged at 5.25% and its signal of easing inflation also helped the yen gain ground against the dollar on January 31, dealers said.Market participants were now looking to US jobless figures for January scheduled to be released on February 2, they said.The dollar was also weak against major Asian currencies.
The US unit fell to 1.5354 Singapore dollars from 1.5368 in late Asian trade on January 31, to 48.76 Philippine pesos from 48.87, to 32.88 Taiwan dollars from 32.96 and to 938.55 South Korean won from 942.30. It declined to 9,087 Indonesian rupiah from 9,090 but rose to 34.96 Thai baht from 34.38.