Dollar sinks in Asia on US debt fears
Dollars. AFP FILE PHOTO
TOKYO – The dollar fell in Asia Monday as investors fear a US budget deadlock in Washington could continue past a mid-October deadline to raise the country’s borrowing limit and cause a devastating default.
The greenback bought 97.08 yen in Tokyo, against 97.47 yen in New York Friday afternoon.
The euro was at $1.3567 and 131.76 yen, compared with $1.3557 and 132.14 yen.
Traders are buying the safe-haven yen on concerns US lawmakers – whose face-off has forced a government shutdown – will not strike a budget deal before October 17, when the government runs out of cash to pay its bills and could in turn default.
A similar showdown in 2011 saw the borrowing limit raise at the last minute but not before global stock markets tumbled while the crisis caused the downgrade of Washington’s sovereign debt rating.
US Treasury Secretary Jack Lew warned Sunday that Congress was “playing with fire” as Republican House leader John Boehner said the party would not raise the US debt ceiling without spending cuts.
“If anything both sides have become more entrenched in their positions, implying that any agreement on raising the debt ceiling… also looks out of reach,” Credit Agricole said.
“Market reaction so far has been relatively muted in the expectation of an agreement but such hopes may prove optimistic,” it added.
The government shutdown, which is entering its seventh day, has also affected the release of US economic data with no clarity on when key non-farm payrolls data, originally due out last week, will be published.
