Dollar steady as it nears record low against yen

TOKYO: The dollar steadied against the yen Friday after it had neared a post-war low against the Japanese currency, as market sentiment slightly improved on a global stocks rebound.

The greenback traded at 76.89 yen in the morning in Tokyo against 76.88 yen in New York late Thursday.

The yen, seen as a safe-haven unit amid market turmoil, had Thursday neared the post-World War II high of 76.25 dollar, which it hit in the volatile week after Japan's March 11 earthquake and tsunami.

The euro, weighed down by European debt woes, on Friday inched down to $1.4187 from $1.4238, and to 109.10 yen from 109.24.

Tokyo stocks were slightly higher after Wall Street made a dramatic comeback from huge losses Thursday.

US and European markets had been hit by rumours about France's fiscal strength and potential debt defaults by Italy and Spain amid worries about the wider eurozone debt crisis.

But stocks got a lift from news that French President Nicolas Sarkozy called a eurozone crisis meeting with German Chancellor Angela Merkel.

Also supportive were comments from Central Bank of Luxembourg governor Yves Mersch in a Wall Street Journal interview.

Mersch said that the European Central Bank would keep buying Italian, Spanish and other stressed eurozone government bonds until a new financial rescue system is ready to take over.

Resilient stock markets improved risk appetite overnight, prompting buying of the risk-sensitive euro against the dollar, although the euro's rise eased off and reversed in Tokyo.

"The euro's undertone will remain weak as long as concern lingers over the sovereign debt problem and its possible impact on banks as well as the overall economy," said Bank of Tokyo-Mitsubishi UFJ senior analyst Sumino Kamei.

Investors were watching whether Japanese authorities step back into currency markets after they sold yen last week on fears that its strength will hurt exporters, a driving force of the economy.

Finance Minister Yoshihiko Noda said Friday that Japan will consider various steps if the yen's one-sided moves continue, according to Dow Jones Newswires.

Kamei said the market was also closely watching upcoming US economic indicators for fresh cues.

"While the market is still pessimistic about the course of the US economy, it is seeking further clues in US data as to what degree the economy is slowing down and whether it will get worse," Kamei said.

Masafumi Yamamoto, chief FX strategist at Barclays Bank in Tokyo, said in a note that the yen may avoid hitting the postwar high if US retail sales and University of Michigan consumer sentiment data Friday beat market expectations.

Copyright AFP (Agence France-Presse), 2011