Asian currencies ended the week mixed, with uncertainty emanating from a troubled segment of the US home loan market still weighing on investor sentiment.
JAPANESE YEN: The Japanese yen went through volatile trading in the past week as markets remained jittery on lingering concerns for the troubled US home loan market.
The currency stood at 116.17 to the dollar on Friday, slightly weaker than 116.10 a week ago. "The dollar rebounded in directionless trading as various kinds of speculation appeared and disappeared in the market," said Hironobu Hagi, deputy general manager at Shinsei Bank's capital markets division. "It's as if players were scared about something flying in the dark," Hagi said.
But the problems in the US subprime mortgage sector, and attendant volatility in US asset prices, had capped interest in the dollar, dealers said.
"Players cannot buy the dollar actively as the conclusion of the subprime loan issue has yet to be seen," said Satoshi Tansho, a dealer at Chuo Mitsui Trust Bank.
"First, we want to know how seriously the issue has affected consumer sentiment," Tansho said. The subprime sector refers to higher risk US borrowers who have defaulted on home loans sold on by banks to investors in the US and other countries.
The defaults and falling US house prices have cast doubt on the value of those mortgage-backed assets, staunching credit flow and sending ripples of uncertainty through global markets.
Investors have also been unwinding "carry trades", in which they borrow in Japanese yen, which has very low interest rates, to invest in higher-yielding assets world-wide.
This has boosted demand for yen recently, as investors close out their yen loans amid financial market uncertainty.
AUSTRALIAN DOLLAR: The Australian dollar is poised to rise next week if fears ease about a credit squeeze in the US ease, dealers said.
The Aussie was trading at 82.45 US cents at 5:00 pm Friday (0600 GMT), up more than half a cent on the previous week's 81.89 US cents.
AMP Capital Investors chief economist Shane Oliver said concerns about the US subprime market were holding back the Australian currency.
"While the Australian dollar is likely to remain volatile in the short term, a rebound is likely once the uncertainty around the US economy and credit markets settles down, supported by high commodity prices and a widening of the interest rate differential against the US," he said.
NEW ZEALAND DOLLAR: The New Zealand dollar ended the week at 70.30 US cents, down from 71.25 US cents the previous Friday.
There was little local data to provide direction, and next week's calendar was just as light, dealers said.
CHINESE YUAN: The yuan closed at 7.5445 to the dollar on Friday on the exchange-traded market, compared with Thursday's close of 7.5420, and a closing price of 7.5665 to the dollar the week before.
On the over-the-counter market, it ended at 7.5450 to the dollar Friday against 7.5410 the previous day.
The central bank had set the yuan central parity rate at 7.5607 to the dollar Friday, compared with 7.5567 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 dollar ended the week at 7.79, from 7.81 a week earlier.
INDONESIAN RUPIAH: The rupiah ended the week slightly stronger, trading at 9,395/9,400 to the dollar, compared to 9,405/9,415 to the dollar a week earlier.
PHILIPPINE PESO: The Philippine peso traded lower at 46.55 to the dollar on Friday afternoon from 45.74 on August 24.
SINGAPORE DOLLAR: The dollar was at 1.5220 Singapore dollars Friday from 1.5238 the previous week.
SOUTH KOREAN WON: The won further strengthened to 938.30 won per dollar Friday, compared with 941.70 won a week earlier.
TAIWAN DOLLAR: The Taiwan dollar dropped to close at 32.996 against the US dollar Friday from 32.980 a week earlier.
THAI BAHT: The Thai baht changed little against the dollar over the past week as investors found few fresh leads in the market, dealers said.
The Thai currency closed Friday at 34.30-32 to the greenback, compared with 34.35-40 a week earlier.