|Dollar weighed by US credit downgrade
Tuesday, 09 August 2011 12:49:16
Dollar weighed by US credit downgrade
TOKYO, Aug 8 (APP/AFP): The dollar was under pressure in
Asia on Monday following a US credit downgrade, but it gained some support from an agreement by G7 finance chiefs to cooperate against excessive currency moves.
The euro was also supported after the European Central Bank
said it would make major purchases of eurozone
The dollar fell to 77.82 yen in Tokyo trade from 78.54 yen
in New York late Friday. The euro gained to $1.4340 from $1.4281,
but the European single unit also eased to 111.60 yen from
The dollar was hurt after Standard & Poor's on Friday cut
the US's top credit rating for the first time ever, citing
the country's looming deficit burden and weak
However, financial chiefs and central bankers of the G7
early Monday agreed to cooperate against excessive forex
moves, Japan's Finance Minister Yoshihiko Noda said before
Asian markets opened.
He said officials of the Group of Seven -- Britain,
Canada, France, Germany, Japan, Italy and the United States --
had also talked about European economic issues amid worries
over eurozone sovereign debt.
Noda said excessive foreign exchange movements were
undesirable but declined to comment on whether Japan
had gained understanding from other economic powers on
a large-scale yen-selling intervention last week.
The joint G7 statement "provides the market with some sense
of ease," Dai-ichi Life Research Institute senior
economist Toshihiro Nagahama said.
The statement is "positive" because members "were able to
reach an agreement quickly," Citibank Japan chief currency
strategist Osamu Takashima said.
Looking ahead, investors will be paying attention to whether
the G7 statement is sufficient in easing investors' concerns on
the ongoing European debt crisis,
The euro gained against the dollar after the European
Central Bank said it would "actively" renew bond purchases after
Italy and Spain announced new economic measures and reforms, and
France and Germany pushed for full and rapid
implementation of terms agreed at an emergency summit
Eurozone debt markets will be focused on any purchases
of bonds issued by Italy and Spain, the third- and
fourth-biggest eurozone economies, for signs of ECB activity.
The central bank itself never identifies which bonds it buys.
Sumino Kamei, senior analyst at the Bank of
Tokyo-Mitsubishi UFJ, said the ECB decision was "positive" for
But the risk-sensitive euro was down against the yen on
drops in Asian stock markets.
"There's a general mood of risk aversion as Asian share
markets are down and the Nikkei earlier dropped below 9,100,"
Yuzo Sakai, manager of FX business promotion at Tokyo Forex &
Ueda Harlow, told Dow Jones Newswires.
The dollar was mixed against other major Asian currencies,
rising to 1,078.55 South Korean won from 1,067.20 on Friday and
to Tw$29.01 from Tw$29.00.
The unit also gained to 8,558.75 Indonesian rupiah from
8,538.00 and to 42.68 Philippine pesos from 42.61. It sagged
to Sg$1.2176 from Sg$1.2198 and to 29.81 Thai baht