Asian currencies ended the week mostly up against the US dollar, with the notable exception being the Australian unit, which was down more than one cent on the previous week.
JAPANESE YEN: The Japanese yen surged in the past week as investors dumped the dollar on worries over the US economic outlook, dealers said. The yen stood at 107.72 to the dollar in Singapore on Friday, when Tokyo players took break for a Japanese national holiday, compared with 110.08 in Tokyo a week ago.
Market participants were worried the greenback could go into free-fall against the Japanese unit, even to the 105-yen level, dealers said. Top Japanese officials have recently played down talk of intervention, arguing that a strong yen also had benefits for the Japanese economy.
"I'm sure Japanese authorities are scrutinising the yen's rise but at the same time they've talked of the merits of having a strong yen," said Yosuke Hosokawa, chief forex strategist at Chuo Mitsui Trust Bank. Toru Umemoto, chief forex strategist at Barclays Capital, said: "There is no longer any emotional attachment nor aversion against the yen's appreciation among Japanese politicians and corporate executives which we saw a few years ago."
AUSTRALIAN DOLLAR: The Australian dollar is tipped to continue its downward slide in the coming week as global credit market worries refuse to go away, dealers said.
The Australian dollar ended the week at 87.30 cents, down more than one cent on the previous week's 88.58 US cents. "With the problems we're having in the US, the Aussie at the moment is very vulnerable," Easy Forex senior dealer Francisco Solar said. Chief economist at AMP Capital Investors Shane Oliver said news of sub-prime mortgage related write-offs and losses in the United States had heightened concerns about a US recession and was placing downwards pressure on the Australian dollar.
"The Aussie is vulnerable to further weakness in the short term on the back of uncertainty about the global growth outlook and commodity prices," he said.
"However, as with the Australian share market the latest pullback in the Aussie looks like just another correction in a still rising trend." The result of Saturday's Australian election was unlikely to impact on the currency, Oliver said. "In Australia, while a possible change of government may cause some short-term uncertainty in equity and currency markets, any impact is likely to be short lived given the lack of major macro economic policy differences between the two major parties."
NEW ZEALAND DOLLAR: The New Zealand dollar ended local trading on Friday at 75.62 US cents, slightly up from 75.43 the previous week. The kiwi continued to be underpinned by weakness in the US dollar on worries about the subprime mortgage market, recession and expectations US interest rates will be cut, dealers said.
However, the market volatility had also seen a cutback in carry trades, in which traders borrow in low-yield currencies such as the yen to invest in high yielding currencies, including the kiwi and Aussie. By late in the week there were signs that some risk appetite was returning, creating some revival in carry trades.
CHINESE YUAN: The yuan closed at 7.4106 to the dollar on Friday on the exchange-traded market, compared with Thursday's close of 7.4110, and a closing price of 7.4223 to the dollar the week before.
On the over-the-counter market, it ended at 7.4060 to the dollar against 7.4145 the previous day. The central bank had set the yuan central parity rate at 7.3992 to the dollar on Friday, compared with 7.4119 on Thursday. The People's Bank of China allows a trading band of 0.5 percent on either side of the midpoint.
HONG KONG: The US-pegged Hong Kong dollar closed the week at 7.776 to the greenback, unchanged from a week earlier.
INDONESIA RUPIAH: The rupiah ended the week trading at 9,370/9,373 to the dollar compared to 9,320/9,325 to the dollar a week earlier.
PHILIPPINE PESO: The Philippine peso strengthened to end Friday at 42.85 to the dollar from 43.50 the previous week.
SINGAPORE DOLLAR: The dollar was at 1.4439 Singapore dollars on Friday from 1.4535 the week before.
SOUTH KOREAN WON: The dollar ended its six-day run-up against the won Friday, falling 2.80 won to 930.60 won, as the greenback was weighed down by global concerns over downbeat US growth forecasts.
The recent appreciation of the greenback, which stood at 917.40 won a week earlier, came as foreign investors reduced holdings in the local equity market because of concerns over gloomy US economic outlook and China's possible interest rate hikes.
South Korean Vice Finance Minister Lim Young-Rok said on Friday the recent appreciation of the dollar against the won was a "natural" phenomenon that reflected economic fundamentals and a global preference for safe assets. "It can also be seen as a market reaction to the won's appreciation over the past years," Lim said. Since 2002, the won has strengthened more than 40 percent against the dollar, he said.
TAIWAN DOLLAR: The Taiwan dollar closed on Friday at 32.324 against the US currency, up slightly from 32.336 a week earlier.
THAI BAHT: The Thai baht gained slightly against the dollar amid light trading over the past week as investors kept a wary eye on the mortgage crisis in the United States, dealers said. The Thai baht tested the 33.80 level in mid-week but retreated after importers began buying dollars. Thai unit closed on Friday at 33.82-83 to the dollar compared with 33.87-88 the previous week.
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