Asian currencies ended the week lower against the dollar as dealers said rising inflationary pressure in the United States may prevent further rate cuts in January.
JAPANESE YEN: The yen lost ground against the dollar over the past week after a spike in US inflation dampened expectations of further Federal Reserve interest rate cuts, dealers said.
The Japanese currency stood at 113.07 to the dollar in late Tokyo trade on Friday, down from 112.46 a week earlier. "The greenback was boosted by the largest monthly rise in the CPI (consumer price index) for two years which prompted traders to pare expectations for Fed interest rate cuts," noted NAB Capital analyst John Kyriakopoulos.
US consumer prices jumped 0.8 percent in November and core prices excluding volatile food and energy costs rose 0.3 percent, the US government said Friday.
Rising inflation is likely to make the Fed less inclined to cut interest rates soon, which will help keep the greenback's yield relatively attractive compared with other currencies, dealers said.
But the yen's decline against the dollar was limited as news of a big loss at investment bank Bear Stearns prompted fresh concern about the fallout from the US subprime loan crisis, dealers said.
"Investors sold the dollar after the bad earnings report of Bear Stearns and a fall in the Philadelphia December business index to the lowest since 2003," said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.
US investment giant Bear Stearns posted its first-ever quarterly loss of 854 million dollars and a larger-than-expected 1.9 billion-dollar write-down due to its exposure to the subprime loan crisis.
AUSTRALIAN DOLLAR: The Australian dollar is tipped to fall next week and will experience volatility early in the New Year due to the global credit crunch, dealers said. The Australian dollar ended the week at 86.28 cents, down sharply from the previous week's 88.10 US cents.
ANZ's senior currency strategist said thin trading conditions in the holiday period meant the Australian dollar would be volatile against the greenback.
"We're clearly into very thin holiday markets now and maybe the Aussie is getting a bit of support on rate differentials over the holiday period."
AMP Capital Investors chief economist Shane Oliver said the dollar was set to struggle against the greenback.
"The Australian dollar, along with commodities, is likely to have a rough patch over the next six months on the back of ongoing worries about global growth," he said. "But it should remain strong and be trending back up in the second half as commodity prices trend back up again and the interest differential in Australia's favour remains wide."
Oliver said the Aussie's fundamentals remained sound and the strong commodity market meant it would hold its own against the US currency in the longer term.
"A spike to parity versus the US dollar is still possible some time later in the (next) year," he said. "The Aussie dollar is likely to remain solid on the back of still high commodity prices and a rising interest rate differential in Australia's favour."
NEW ZEALAND DOLLAR: The kiwi ended the week's local trading at 76.28 US cents, down sharply from 78.50 the previous Friday. The kiwi was pushed down Thursday by a higher than expected third quarter current account deficit of 5.17 billion dollars, against forecasts of around 4.9 billion dollars. But economic growth data on Friday was better than expected at 0.5 percent for the third quarter, giving the local currency a nudge higher.
The annual growth rate of 2.7 percent was up from 2.1 percent in the June year, Statistics New Zealand said.
CHINESE YUAN: The yuan closed at 7.3671 to the dollar Friday on the exchange-traded market, compared with Thursday's close of 7.3667, and a closing price of 7.3710 to the dollar the week before. On the over-the-counter market, it ended at 7.3630 to the dollar against 7.3694 the previous day.
The central bank had set the yuan central parity rate at 7.3572 to the dollar Friday, compared with 7.3649 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-linked Hong Kong dollar ended the week at 7.8019 to the dollar, compared to 7.7986 a week earlier.
INDONESIA RUPIAH: The rupiah ended the week trading at 9,430/9,440 to the dollar compared to 9,325/9,330 to the greenback a week earlier.
PHILIPPINE PESO: The Philippine peso fell to 41.52 to the dollar on Friday afternoon from 41.21 the previous week.
SINGAPORE DOLLAR: The dollar was at 1.4590 Singapore dollars on Friday from 1.4444 the week before.
SOUTH KOREAN WON: South Korea's won closed at 940.70 to the dollar Friday, down from 930.10 a week earlier. The won fell to a four-month low of 947.50 to the dollar at one point on Friday but bounced back soon as exporters began selling the greenback en masse at 945 won and domestic players at banks stopped buying the US currency. Dealers said the dollar was strong on expectations that US interest rates would not be cut further as foreign investors remained net sellers in the local stock market.
TAIWAN DOLLAR: The Taiwan dollar slipped to 32.485 against the US dollar from 32.376 a week earlier.
THAI BAHT: The Thai baht fell slightly against the dollar over the past week as investors stayed on the sidelines ahead of Sunday's election, the first since last year's coup ousting premier Thaksin Shinawatra, dealers said. The Thai unit closed Friday at 33.69-70, down from 33.60-61 a week earlier.