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Dollar hovers near

1.5 marks in Tokyo

TOKYO: The dollar jumped to a nearly seven-month high by hitting 1.5 marks in early afternoon Tokyo, dipped slightly and then climbed back above that level again in late trading. It also strengthened, but less, against the yen.

Tokyo's gains on Wednesday followed an overnight surge that saw the dollar climb by nearly two pfennigs on expectations of a growing gap between German and U.S. interest rates.

Weak February German industrial orders and comments from Bundesbank President Hans Tietmeyer strengthened these feelings, dealers said.

Hans Tietmeyer said in an interview with Die Welt that there was no reason to raise interest rates at present and the German central bank would continue to examine whether there was scope for another easing.

This sent the dollar roaring upwards in overnight trade and supported its gains during Asian trading time as well. Most of the buying in Tokyo seemed to be from overseas operators, with some light speculative buying as well, dealers said.

Some options-linked buying was also detected.

The greenback had risen as high as 1.5003 marks as of 0600 GMT, according to official Bank of Japan (BOJ) information, although it later slipped a bit as Singapore operators sought to take profits before climbing back above 1.5 marks again.

The market is waiting for the release of German March unemployment data at 0800 GMT for more interest rate clues.

"If the data shows that the German economy is in the doldrums, it'll strengthen expectations for a rate cut at the Bundesbank meeting on April 18," said Mitsuru Saito, senior economist at the Sanwa Bank.

Some dealers said there were market rumours, though, that the unemployment figures were going to be lower than expected. A Reuters poll of economists yielded average estimates of a rise of 35,000 in March compared to 107,000 in February.

The dollar's movements against the yen were somewhat calmer, due to a dearth of fresh factors in this arena. But dealers said the greenback remained on an upward track.

"A try of 108.80 yen late today could well be in the picture, and technical factors also seem to be pointing to gains as well," a city bank dealer said, noting the presence of stop-loss buying orders at 108.80 yen and 109.00 yen flat.

Although the market had been waiting for comments from BOJ Governor Yasuo Matsushita, his statements ultimately had little impact on the dollar.

Matsushita told a news conference that Japan's monetary policy will put emphasis on securing a basis for economic recovery, adding that the Japanese economy was recovering gradually but uncertainties remained.

Dealers commented that Matsushita appeared somewhat cautious in his statements after last Wednesday, when statements he made hinting that Japan's low interest rates might be near an end sent the dollar lower against the yen.

Singapore dealers said that bullish sentiment persists for the dollar and that more gains are foreseen against the yen and the mark.

But they added that gains are likely to meet resistance shortly.

"I think 109 (yen) is going to be a tough nut to crack. If it does, there will be a big war at 110," one dealer said.

He said the dollar was unlikely to rise above 108.80 yen before New York trade, but it is seen rising to 1.5070 marks during European time.-Reuter