Greenback Struggles But Cushioned By BOJ Wariness

Tokyo, June 28: | Updated: Jun 29 2002, 05:30am hrs
The dollar stayed on the defensive on Friday amid doubts about Washington’s commitment to its official strong-dollar policy and the fragile US stock market, but cautioned over intervention limited selling.

The dollar was glued in tight ranges throughout the day as Tokyo dealers refrained from taking new positions before the weekend, having experienced rapid volatility during the week.

“There was not much energy left for Tokyo players to take new positions after seeing the dollar plunging to 118.90 yen (on Wednesday) and the euro powering up towards parity (to $0.9944 on Wednesday),” a senior dealer at a Japanese trust bank said.

“With nervousness about intervention intact, the market hesitated to drive the dollar lower on Friday,” the dealer said. “But as there are still many uncertainties, the dollar could come under more pressure if US stocks plunge again.”

The dollar stayed around 119.40-119.50 yen throughout the day, keeping some distance from its seven-month low of 118.90 hit on Wednesday. As of 0541 GMT, the dollar was quoted at 119.46/51 yen, little changed from 119.55/60 yen in late US trade.

The euro briefly rose above 99 cents in early trade but fell back to stand at 98.78/83. Europe’s common currency was quoted at 118.07/16 yen, little changed from late US levels around 118.11.

Downward pressure on the dollar was strong, with plenty of speculators waiting to sell should it rise on intervention and heavy sell orders placed above 120 yen, dealers said.

Many exporters were rumoured to be lowering their offer levels from above 121 yen, they said. The market shrugged off a barrage of Japanese economic indicators, which drew a mixed picture of the economy.

On the bright side, industrial production rose 3.9 per cent in May from April, beating expectations centred on 2.9 per cent.