Dollar steady in Asian trade after Fed rally

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AP FILE PHOTO

TOKYO–The dollar was steady in Asia Friday after a rally fuelled by the US Federal Reserve’s signal that it could start reeling in its stimulus scheme this year, while worries about China’s economy spooked investors.

In Tokyo, the greenback fetched 97.20 yen, compared with 97.27 yen in New York late Thursday.

The euro gained to $1.3241 from $1.3223 in US trading, while it bought 128.68 yen compared with 128.62 yen.

Despite softening from New York, largely due to a fall in Tokyo’s Nikkei stock index, “dollar-buying is prevailing against most major currencies, not just the yen”, said Masaru Ishibashi, head of forex trading at Sumitomo Mitsui Banking.

Global markets were sent tumbling after Fed chief Ben Bernanke said Wednesday the bank could begin to wind down its $85-billion-a-month bond-buying as early as this year if the US economy continues to improve.

With less cash sloshing about financial markets, demand for the dollar rises, making it stronger.

Traders also flocked to the dollar on renewed concerns about slowing growth in China, the world’s second largest economy, after poor manufacturing data.

The euro was pressured by the Fed’s expected move, while worries over the recession-hit eurozone jumped again amid turmoil in bailed-out Greece concerning the future of its state broadcaster.

Credit Agricole added that “services and manufacturing sector-related business activity (in the eurozone) has been continuing to contract”.

“Accordingly, growth expectations for the eurozone as a whole are unlikely to improve, at least in the short-term,” it added.

Investors will be watching a speech later in the day by Bank of Japan Governor Haruhiko Kuroda, hoping for some guidance on the central bank’s own giant stimulus drive.

“It will be interesting to hear his take on the monetary easing so far, which has resulted in big swings in the yen, the stock market and other financial indicators,” National Australia Bank said.

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