The dollar slipped further against major currencies on Thursday on deepening worries over the health of the global economy due to the slow US recovery and eurozone debt crisis.The greenback was trading at 76.62 yen, down from 76.83 yen in New York on Wednesday. The euro firmed to $1.4209 from $1.4168, but dipped to 108.89 yen from 108.91 yen.
Market players have been keenly watching as the greenback nears its post-World War II low of 76.25 yen, which it hit in the turbulent week after Japan’s March 11 quake and tsunami disaster.Global financial markets have been roiled since Standard & Poor’s stripped the United States of its AAA credit rating on Friday, with fears that European nations with large debt problems may be next.
Speculation about a possible credit downgrade for France was a factor that lifted the yen against the euro. The greenback could drop below its post-war low if Tokyo does not step into the market again or the Bank of Japan expands monetary easing, said Barclays Capital chief currency strategist Masafumi Yamamoto. The safe-haven yen has stayed strong as global investors have dumped US and European stocks to find secure a place to park their capital.
Because a strong yen hurts Japanese exporters, the nation’s main economic engine, Japan stepped into the foreign exchange market last week to dump yen for dollars. And the government has signalled it may do so again.
Finance Minister Yoshihiko Noda said on Thursday he remained attentive to financial markets, telling reporters shortly before the market opened that “I think one-sided movements (in the forex market) are continuing.
“I’ll continue to watch the market today with keen awareness.” Prime Minister Naoto Kan, in a televised legislative committee meeting, echoed Noda’s comment, saying: “We will closely monitor the market and think about ways to deal with it.” However, Citibank chief currency strategist Osamu Takashima said the dollar/yen rate could mark a new low in the near future, adding that “the pair still has some room to move lower”.
From / Gulf Today