Dollar holds on to gains as Asian shares slip

The dollar Thursday held on to its previous day’s gains against the yen after Japan stepped into the currency market but Asian stocks were lower as traders took profits from recent advances.

Traders in Japan were buoyed by comments from Prime Minister Naoto Kan saying the government would take “resolute actions” in currency markets when necessary but the yen began to inch back up as jitters returned to the market.

“We are determined not to allow the drastic fluctuation of the yen,” Kan told a business conference in Tokyo, in comments that indicate he is prepared to step in to rein in the yen again.

In Tokyo trade the dollar was at 85.36 yen, from 85.72 in New York late Wednesday. But the yen’s level was sharply lower than a 15-year high of 82.86 to the dollar reached Wednesday morning in Tokyo, moments before Japan stepped in to dump the yen for the first time since 2004.

The euro stood at 110.84 yen from 111.50 in New York, but also well up from the 107 range it was hovering at Wednesday morning.

The weaker yen boosted exporters, who have been hammered recently as a stronger currency makes their goods more expensive overseas and erodes their repatriated profits.

However, analysts said the dollar could slip back below 85 yen as Japan is seen having stopped its market manoeuvres for now, while the US Federal Reserve is thought to soon embark on another round of quantitative easing this year.

Traders also agree it is unlikely either US or European governments will follow Japan’s lead in the forex market, meaning the dollar’s gains will be limited.

Shares in Tokyo edged down 7.06 points to 9,509.50 as traders took profits following a 2.34 percent surge on Wednesday.

Sydney slumped 1.21 percent, or 56.2 points, to 4,605.3 and Hong Kong fell 0.45 percent by the break.

Regional markets had seen four days of broad-based gains, which were helped this week by an agreement by central banks on a new set of rules to help boost lenders’ defences against another financial meltdown.

Wall Street provided little direction, with the Dow rising 0.44 percent in choppy trade after an anaemic set of US economic data.

Industrial production rose by a modest 0.2 percent in August, official figures showed, a significantly slower pace than the previous 0.6 rise in July, and slightly less than expected by analysts.

Another report indicated growth in manufacturing activity in New York slowed in September from the previous month.

Shanghai was down two percent in afternoon trade Thursday with banks leading the decline amid concerns that the central bank could soon raise interest rates, dealers said.

In oil markets New York’s main contract, light sweet crude for delivery in October, fell 48 cents to 75.54 dollars a barrel.

Brent North Sea crude for November delivery retreated 27 cents to 79.15 dollars in its first trading day.

Gold opened at 1,267.00-1,268.00 US dollars an ounce in Hong Kong, down from Wednesday’s closing price of 1,269.70-1,270.70.

In other markets:

— Seoul closed 0.66 percent, or 12.03 points, lower at 1,811.85.

— Taipei fell 0.78 percent, or 64.07 points, to 8,099.75.

Neo Solar Power Corp was 7.0 percent down at 75.2 Taiwan dollars while Taiwan Semiconductor Manufacturing Co was 1.14 percent lower at 60.5.

— Manila rose 0.80 percent, or 31.98 points, to end at 4,005.46.

The index ended at a record high following strong unemployment figures Wednesday. Philippine Long Distance Telephone added 0.9 percent to 2,520 pesos, Metropolitan Bank & Trust lifted 0.1 percent to 73.05 and property developer Megaworld jumped 2.2 percent to 2.37. — Wellington edged up 0.35 points to 3,195.63.

Fisher & Paykel Appliances closed up 5.2 percent at 61 New Zealand cents and Fletcher Building fell 0.3 percent 8.33 dollars while and Steel & Tube fell 2.0 percent to 2.50.