Asian currencies ended the week mostly higher against the dollar but the yen retreated from multi-month highs as dealers took profits from the Japanese unit's recent advances.
JAPANESE YEN: The yen slid back from new seven-month highs against the dollar, although Japanese officials suggested they would tolerate its current strength after the inauguration of a new centre-left government in Japan on Wednesday.
The Japanese unit stood at 91.23 against the dollar late Friday in New York, compared with 90.64 a week earlier. In Tokyo, the yen ended daytime trading at 91.24 to the dollar on Friday, down from 90.93 the previous week. At one point, it touched the week's local low of 91.45 on upbeat US economic data including an unexpected decline in new jobless benefit claims.
The yen started the week on a strong note, touching 90.18 on Monday on growing prospects that the US Federal Reserve will maintain its easy monetary policy for the time being. It slipped back on Tuesday but rebounded the next day when Japan's new Finance Minister Hirohisa Fujii said that in principle he opposed intervening in the market to weaken the yen.
The comments "reinforced expectations that the new ruling Democratic Party would be more tolerant of a stronger yen than the outgoing (conservative) Liberal Democratic Party," NAB Capital analysts wrote in a note. On Thursday, Bank of Japan governor Masaaki Shirakawa said at a press conference: "While a strong yen may pressure the economy in the short term by depressing prices, it bolsters it in the mid- to long-term."
He added that a stable exchange "is desirable." Market players found it difficult to build positions toward the weekend ahead of a five-day holiday break. Trading will resume next Thursday.
AUSTRALIAN DOLLAR: The Australian dollar hit its highest level in more than a year this week as the US dollar depreciated and risk appetite grew, dealers said. The commodities-based Aussie closed Friday at 86.74 US cents, up from 86.32 US cents a week earlier, but shy of Thursday's 87.75 cent peak, which was the strongest it has been since August last year.
"The economic and financial market environment has found renewed vigour over the past few weeks," said ANZ economist Warren Hogan. "The balance of risks to our Australian dollar outlook have moved significantly to the upside, and with the US dollar environment continuing to deteriorate, this has led us to upgrade our Australian forecast," he added.
Global recovery was likely to underpin commodities demand and high-yielding currencies such as the Aussie, added AMP economist Shane Oliver. "A retest of parity against the US dollar is likely in the next 12 to 18 months," Oliver said.
NEW ZEALAND DOLLAR: The New Zealand dollar finished local trading Friday at 71.02 US cents, up from 70.40 the previous week. The kiwi rose to a 13-month high around 71.55 cents on Thursday but fell back Friday as the US dollar gained ground against the euro. BNZ Capital senior strategist Danica Hampton also pointed to comments by the Bank of Japan governor that a stronger yen might support the Japanese economy in the longer run.
Those comments provided some support for the yen and encouraged profit-taking from investors who had bought New Zealand dollars against the yen.
CHINESE YUAN: The yuan closed at 6.8279 to the dollar Friday on the over the counter market, compared with Thursday's close of 6.8265, and a closing price of 6.8290 to the dollar the week before.
The central bank had set the yuan central parity rate at 6.8271 to the dollar Friday, compared with 6.8272 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 ended the week unchanged at 7.751 compared to the previous week.
INDONESIAN RUPIAH: The rupiah ended at 9,730 to the dollar, up from 9,937 the week before.
PHILIPPINES PESO: The peso rose to 47.70 to the dollar on Friday from 48.33 a week earlier.
SINGAPOREAN DOLLAR: The dollar was at 1.4144 Singapore dollars from 1.4222 the week before.
SOUTH KOREAN WON: The won further gained strength over the past week to close at 1,207.80 to the dollar Friday, compared with 1,221.80 won a week earlier, reflecting the global weakness of the greenback and strong local stock prices, dealers said. Dealers said the dollar could fall below the 1,200 won level unless government authorities intervene to prop up the greenback.
TAIWAN DOLLAR: The Taiwan dollar closed at 32.458 against the US dollar, up from 32.628 a week earlier.
THAI BAHT: The baht rose sharply against the dollar over the past week because the dollar was oversold and there was capital inflow into the local stock exchange, dealer said. The Thai unit hit a 13-month high on Thursday of 33.63 baht to the dollar but due to intervention by the central bank the baht closed Friday at 33.71-73 baht compared to the previous week's close at 33.96-97.
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