The Japanese yen weakened against the US dollar after a volatile week on Asian stock markets amid fears a deep global recession lies ahead.
JAPANESE YEN: The yen eased back from 13-year highs against the dollar. The Japanese currency stood at 97.00-02 against the dollar at the end of daytime trading on Friday, down from 95.14-17 against the dollar a week earlier. The yen fetched the week's high of 91.88 against the dollar on Monday when Tokyo shares plunged to a 26-year low on fears of global recession which led investors to seek refuge.
After losing steam to as low as 99.79, it got a second wind on Friday as a smaller-than-expected rate cut by the Bank of Japan prompted investors to buy the yen. The previous week the Japanese currency hit 90.87 against the dollar at one point, surging to the 90 yen level for the first time since August 1995.
The central bank's policy board cut its key interest rate by 20 basis points to 0.3 percent. The board was evenly split 4-4 on whether to lower interest rates, so the final decision was taken by governor Masaaki Shirakawa.
"The smaller-than-expected rate cut showed a limit for what the BoJ can do," Bank of Tokyo-Mitsubishi UFJ dealer Naomi Fink said. "The split decision was also a factor for the resumption of buying the yen," he added.
Market players are awaiting possible rate cuts by central banks in Australia, Britain and other European nations, dealers said. They will also follow "full-scale" US moves to work out an additional economic stimulus package after the US presidential election on Tuesday, Nikkei Quick News said.
AUSTRALIAN DOLLAR: The Australian dollar is likely to continue to be hit by lower commodity prices and an anticipated domestic interest rate cut in the week ahead, analysts said.
The Australian dollar was trading late Friday at 67.14 US cents, up more than five percent on the previous week's close of 63.91 US cents. But it endured a rocky week in which the central bank intervened several times to boost liquidity to stop a free-fall.
The central Reserve Bank of Australia is expected to slash rates at its monthly meeting Tuesday by 50 basis points, a move which would see the official cash rate fall to 5.50 percent.
"With commodity prices likely to fall further and more interest rate cuts expected in Australia, the Aussie is likely to remain weak well into next year," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors.
"However, we remain of the view that this is a cyclical correction and the long-term trend in the Aussie will remain up as commodity prices likely resume their long-term rising trend later next year."
Economists at ANZ said the unprecedented decline in the currency, which had been close to parity with the US dollar mid-year, suggested a degree of stress emerging in Australia's balance of payments.
"As global capital markets freeze, so does the capital flow required to fund our current account deficit," it said in a note. "As global markets normalise these stresses should abate and allow for a modest rise in the Aussie over the months ahead."
NEW ZEALAND DOLLAR: The New Zealand dollar ended the week at 58.80 US cents, up from 58.55 the previous Friday. Attempts by the kiwi to push through the 60-cent barrier were quickly repelled, dealers.
CHINESE YUAN: The yuan closed at 6.8399 to the dollar Friday on the exchange-traded market, compared with Thursday's close of 6.8400, and a closing price of 6.8523 to the dollar the week before. On the over-the-counter market, it ended at 6.8395 to the dollar against 6.8380 the previous day. The central bank had set the yuan central parity rate at 6.8258 to the dollar Friday, compared with 6.8270 on Thursday.
The People's Bank of China allows a trading band of 0.5 percent on either side of the midpoint.
HONG KONG DOLLAR: The US-pegged Hong Kong unit was at 7.751 to the dollar, little changed from 7.754 a week earlier.
INDONESIAN RUPIAH: The rupiah ended at 11,000 to the dollar, down from 10,200 the week before.
PHILIPPINE PESO: The Philippines peso rose slightly to 48.94 to the dollar on Friday afternoon from 48.991 on October 24.
SINGAPORE DOLLAR: The dollar was trading at 1.4815 Singapore dollars from 1.5074 the week before.
SOUTH KOREAN WON: The won regained strength to close at 1,291.0 to the dollar Friday, compared with 1,422.0 won a week earlier, after the US Federal Reserve announced a currency swap deal worth up to 30 billion dollars with Seoul's central bank. The won strengthened to 1,250 won per dollar Thursday but again sharply weakened Friday as jitters over weak fundamentals and a global economic slowdown swung back into focus. Dealers said the won was likely to move between 1,274 and 1,325 won per dollar when the market reopens on Monday.
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