Dollar pressured in Asia holiday trade

December 24, 2008
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, TOKYO, December 24 – The dollar was on the back foot in thin holiday trade in Asia Wednesday, weighed down by fresh data indicating persistent weakness in the US economy.

The dollar fell to 90.37 yen in Tokyo afternoon trade from 90.96 in New York late Tuesday. Markets in Japan were closed Tuesday for a holiday.

The euro firmed to 1.3965 dollars from 1.3924 but slid to 126.16 yen from 126.66.

Currencies moved in a narrow range as many market players were absent ahead of the Christmas holiday on Thursday in the United States and Europe when markets will be closed.

But many traders were downbeat about prospects for 2009, when some economists forecast that the global economy will decline for the first time in decades.

"Uncertainty remains on the markets going into the New Year. Investors are adjusting their positions as they are wary of risks that markets will turn negative," said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corporation.

US government data released on Tuesday left unrevised a previous estimate of 0.5-percent negative growth for the third quarter, a figure seen as marking the start of a steep downturn for the world\’s biggest economy.

Separate reports showed declines in new and existing home sales.

New home sales slipped 2.9 percent in the past month and fell 35.3 percent from a year earlier to the lowest level since January 1991.

Sales of existing US homes slumped a further 8.6 percent, according to the National Association of Realtors.

The euro got a boost after European Central Bank (ECB) chief Jean-Claude Trichet left the door open for more measures — other than monetary loosening — to fight deflation and shore up the economy, dealers said.

The Japanese central bank cut rates last Friday to a benchmark 0.1 percent and unveiled measures to help ailing credit markets by agreeing to buy commercial paper, debt issued by companies to run their daily operations.

China followed Monday, lowering its rate by 0.27 percentage points to 2.25 percent, the lowest level since February 2004, but markets were disappointed by the smaller-than-expected cut.

The dollar was mixed in regional Asian trade.

It firmed to 1,309.70 South Korean won from 1,304.5, to 47.66 Philippine pesos from 47.28, to 11,165 Indonesian rupiah from 10,940, to 34.60 Thai baht from 34.52 and to 33.05 Taiwan dollars from 33.01.

The greenback slipped to 1.4478 Singapore dollars from 1.4489.

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