TOKYO, November 19 – The dollar declined against the yen in Asian trade Wednesday on growing concerns about the struggling US auto industry, dealers said.
The dollar fell to 96.58 yen in Tokyo afternoon trade, down from 96.89 in New York late Tuesday. The euro edged up to 1.2632 dollars from 1.2621 but slipped to 121.99 yen from 122.32.
"There are many dollar-negative factors from the US these days, such as weak economic data and troubled automobile firms," Hiroshi Yoshida, a senior dealer at Shinkin Central Bank, told Dow Jones Newswires.
But he noted that stock markets were not reacting much to the bad news, which was limiting the impact on the greenback.
Markets were closely watching developments after the heads of the Big Three, General Motors, Ford and Chrysler appealed to Congress for loans to prevent their industry from collapsing.
Treasury Secretary Henry Paulson indicated that he was unwilling to allocate funds from a financial sector bailout to the manufacturing sector.
"The troubled US automotive industry poses a large economic and potentially systemic risk, so a lack of a rescue plan is bad news for risky assets in the near term," warned Barclays Capital analysts.
The greenback was also pressured by a record 2.8 percent drop in US producer prices in October.
Slower inflation would give the Federal Reserve more room to lower US interest rates even further to try to ward off a deep recession in the world\’s largest economy.
The Hong Kong Monetary Authority said it pumped 600 million US dollars into the forex market to defend the local currency\’s peg to the greenback.
The de facto central bank said it bought 4.65 billion Hong Kong dollars\’ worth of US currency in two interventions, after the Hong Kong dollar repeatedly hit its upper trading band of 7.75 to the US unit.
The dollar rose to 1.5289 Singapore dollars from 1.5265 on Tuesday, to 1,446 South Korean won from 1,438, to 12,030 Indonesian rupiah from 11,950 and to 50.03 Philippine pesos from 49.97.
At the same time it held steady at 33.26 Taiwan dollars and 35.01 Thai baht.