Asian currencies dipped over the past week, with the Australian dollar sinking to its weakest level this year and the yen touching a five-week low, as a US interest rate hike appeared likely.
US Federal Reserve chairman Alan Greenspan said in congressional testimony on Wednesday that the Fed funds rate "must rise at some point to keep inflation from emerging."
JAPANESE YEN: The yen dipped to a five-week low of 109.87 to the dollar toward the end of the week held down by speculation about an early hike in US interest rates, dealers said.
The Japanese unit recovered slightly late Friday to fetch 109.27-29 to the dollar, down from 108.37-39 to the dollar a week earlier.
Dealers said dollar offers from Japanese exporters were lined near the 110 yen level for hedging purposes. "I think we are still in a firmer dollar phase but sellers are lined up at the 110 yen level," said Mizuho Bank foreign exchange manger Hideyuki Tsukamoto.
Tsukamoto said, "Everyone believes that Greenspan's comments this week mean that the groundwork has been done for an interest rate hike."
The economic journal Nihon Keizai Shimbun said in its Internet edition that the market "cannot keep its eyes off remarks by US monetary officials and economic indicators for the time being."
It added that the release on Thursday of US gross domestic product data for January-March must also be watched.
The Nihon Keizai did not expect major market-moving news from a weekend meeting of Group-of-Seven (G7) finance ministers and central bankers, and a monetary policy meeting of the Bank of Japan on Wednesday.
AUSTRALIAN DOLLAR: The Australian dollar was expected to lose further ground against the greenback next week after hitting a low for 2004 as markets geared up for an interest rate hike in the United States, dealers said.
The currency ended the week at 73.31 US cents, almost a cent down on last week's close of 74.26 US cents, after falling to 72.35 US cents overnight Thursday in response to Greenspan's comments that US rates were likely to rise in coming months.
A US rate hike would narrow Australia's rate advantage over the rest of the industrialised world. Australia's official cash rate is 5.25 percent, compared to 1.0 percent in the United States, providing a powerful incentive to buy the Australian currency.
Arab Bank foreign exchange dealer Scott Young said Greenspan's comments drove the US dollar higher against the euro and the pound, the two biggest influences on the Australian dollar's fortunes.
NEW ZEALAND DOLLAR: The New Zealand currency closed Friday worth 63.01 US cents, down from 63.98 US cents a week earlier.
Dealers said worse than expected US jobless and inflation data had arrested some of the kiwi's decline.
"We opened around our lows and closed around the highs," ANZ Investment Bank senior dealer Mark Elliott said Friday.
SINGAPORE DOLLAR: The US dollar was at 1.6989 Singapore dollars on Friday from 1.6815 the previous week.
HONG KONG DOLLAR: Hong Kong's US-pegged dollar was at 7.799 on Friday from 7.7983 the previous week.
INDONESIAN RUPIAH: The Indonesian rupiah closed the week virtually unchanged at 8,618-8,623 to the dollar compared with the previous week's close of 8,617-8,623.
PHILIPPINE PESO: The Philippines peso rose to 55.75 to the dollar in late trading Friday, compared to 55.80 a week before.
SOUTH KOREAN WON: The won closed at 1,158.30 won per dollar Friday, compared with 1,160.10 a week earlier, as buying orders from state banks and overseas buyers propped up the greenback.
The US dollar was under pressure from domestic business firms, who were selling the hard currency they had earned in overseas markets, and foreign investors, who were bringing in the US currency to buy South Korean stocks.
TAIWAN DOLLAR: Taiwan's dollar declined 0.36 percent over the week to close at 33.093 against the greenback Friday on the back of a weaker Japanese yen. It had closed at 32.975 a week earlier.
THAI BAHT: The baht weakened against the US dollar over the past week in line with regional currencies, dealers said. It closed Friday at 39.53-56 baht to the greenback compared to the previous week's close of 39.42-44.
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