Dollar edges closer to post war low against yen

November 1, 2010

, TOKYO, Nov 1 – The dollar hit a new 15-year low of 80.21 yen in Asia on Monday to edge closer to its lowest level since World War II as US economic data bolstered expectations of further credit easing, dealers said.

The dollar fell to 80.21 yen in early Tokyo trade, the lowest since a post-war low of 79.75 yen on April 19, 1995.

The greenback quickly surged back into the 81 yen range after touching the new 15-year low, prompting speculation as to whether the movement was the result of Japanese intervention, a major trade or a computing error.

It was not confirmed whether Japanese authorities had intervened to weaken the yen.

The dollar later traded at 80.45 yen, up from 80.42 yen in New York late Friday.

"The dollar showed wild swings this morning…. Nervous trading will continue with the dollar hovering just above 80 yen," said Hideyuki Inoue, senior dealer at Mitsubishi UFJ Trust and banking.

The yen\’s moves have been "excessive" recently, a Japanese government official told reporters, but he declined to comment on whether Tokyo had intervened.

The euro rose to 1.3995 dollars from 1.3929 in New York late Friday, and to 112.58 yen from 112.09.

The dollar\’s slide came amid speculation that the US Federal Reserve may soon take additional monetary easing measures as its policy-setting Federal Open Market Committee meets Tuesday and Wednesday.

The committee was expected to announce at the conclusion of the meeting a decision to renew asset purchasing policies in a bid to boost the economy.

A modest rise in US economic output indicated by data on Friday has bolstered expectations of additional monetary-easing measures.

Inoue cautioned against having too high expectations of the Fed credit easing.

The Fed "will likely do something as markets have high hopes but I wonder if the US economy is so bad," he said.

Investors were "rather taking risks on firm stock prices" than betting on a big credit easing by the Fed, he said.

The dollar fell against other Asian currencies, falling to 1.2904 Singapore dollars from 1.2988 on Friday, to 30.45 Taiwan dollars from 30.64 and to 42.90 Philippine pesos from 43.04.

It also fell to 8,921 Indonesian rupiah from 8,927, to 1,116.75 South Korean won from 1,124.15 and to 29.85 Thai baht from 29.97.

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