Asian currencies fell against the dollar during the week after the US Federal Reserve kept the cost of borrowing unchanged and as trade winded down ahead of the Christmas holidays.
JAPANESE YEN: The yen fell against the dollar during the week as investor sentiment was buoyed by an improving outlook for the US economy. It dropped to 90.40 to the dollar in New York on Friday from 89.08 a week earlier after Japan's central bank said that it was vital for the world's number-two economy to snap out of deflation.
The Bank of Japan's comment appeared to have set the stage for further action to battle falling prices. "We can be sure that the BoJ will reaffirm its commitment to keeping interest rates low for a long time to come," said Neil Mellor at Bank of New York Mellon. "But whether the BoJ will be prepared to go one step further than this and introduce further measures... is far from clear."
The yen's slide accelerated midweek after the US central bank kept its overnight lending rate unchanged in a range of zero to 0.25 percent, but noted that economic conditions had improved recently.
Daiwa Institute of Research chief forex analyst Yuji Kameoka told Dow Jones Newswires that the yen was not expected to start rising anytime soon, given Japan's consumer prices were already in negative territory.
The central bank's escalated rhetoric against deflation "could have some psychological effects of discouraging yen-buying," Kameoka said.
"There's a possibility that if the yen makes any sharp gains from now on, that could prompt the Bank of Japan to take additional easing steps" in hopes of stemming the yen's gains, he said.
AUSTRALIAN DOLLAR: Weaker-than-expected domestic growth and muted commentary from the central bank weighed on the Australian dollar this week, dealers said. The commodities and risk-based Aussie closed Friday at 88.87 US cents, down from 91.68 US cents a week earlier.
It was the first time in 10 weeks the local unit had traded below 89 cents, losing more than three percent over the week as the US dollar rallied and the euro sagged, said ANZ economist Amber Rabinov. "It has been a tough week for the Australian dollar, with central bank communications, weaker than expected Australian third quarter GDP, continued sovereign credit concerns in Europe and broad US dollar strength all taking their toll," Rabinov said.
Official data this week showed Australia's economy grew just 0.2 percent in the third quarter, below market expectations and well down from the previous three months, when it expanded 0.6 percent. Commentary from the Reserve Bank of Australia indicating a pause in rate hikes after an unprecedented three-month run of rises weighed particularly heavily on the Aussie, Rabinov said.
"Amidst thin liquidity and limited economic news expected over the next seven days, it may be difficult for the Australian dollar to regain much ground, despite the currency's typically solid seasonal performance at this time of year," she added.
NEW ZEALAND DOLLAR: The New Zealand dollar finished local trading Friday at 71.16 US cents, down from 72.72 the previous week. The balance of payments and gross domestic payment figures for the September quarter are due mid-week, but traders said the market was winding down into Christmas holiday mode.
CHINESE YUAN: The yuan closed at 6.8280 to the dollar Friday on the over-the counter market, compared with 6.8276 the week before. The central bank had set the yuan central parity rate at 6.8284 to the dollar Friday. 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 at 7.757 from 7.751 the week before.
INDONESIAN RUPIAH: The rupiah closed at 9,500 to the dollar, down from 9,450 the week before.
PHILIPPINE PESO: The Philippine peso closed at 46.65 to the dollar, down from 46.12 a week earlier.
SINGAPORE DOLLAR: The Singapore dollar was at 1.4004 to the US dollar from 1.3896 the previous week.
SOUTH KOREAN WON: The won closed at 1,176.2 against the dollar Friday, down from 1,164.0 won on the week amid increasing volatility in the global foreign exchange market. The won has been particularly sensitive to the euro, with offshore players taking cues from the European currency's moves to take bets on the Korean currency.
"We could see some more volatile trading next week with the euro now making big swings, which could move the dollar by as much as 10 won," a foreign bank trader told Dow Jones Newswires.
TAIWAN DOLLAR: The Taiwan dollar fell during the week to close at 32.380 against the US dollar from 32.278 a week earlier.
THAI BAHT: The Thai baht weakened against the dollar over the week as the greenback rose against major regional currencies and amid sluggish trade, a dealer said. He predicted that the Thai unit would be stable next week with quiet trade as many investors would be absent for the Christmas holiday.
The baht closed Friday at 33.20-21 baht to the dollar compared to last week's close of 33.11-12.
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