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Dollar almost

unchanged in Tokyo

TOKYO: The dollar erased its morning gains by late Tokyo trade on Friday in the face of strong selling from US funds and stood little changed, dealers said.

After hitting a 26-month high of 109 yen in early trade, the dollar fell as low as 108.45 yen by midday and remained stuck to narrow ranges for the rest of the afternoon.

It had also risen as high as 1.5070 marks by midday.

"Everything was over by 11 O'clock," said a dealer with a long-term credit bank.

Japanese interbank dealers and investors actively bought the dollar from early trade, their buying accelerated by rumours of buying of Australian dollars for yen, they said.

But after the high of 109 yen was hit, heavy sales by US funds surfaced, dragging down the dollar and triggering stop-loss sales along the way, dealers said. "The selling at 109 yen was just overwhelming," said a city bank dealer.

Renewed worries that the Bank of Japan may end its easy credit stance also pushed down the US currency, they said.

"Major Japanese exporters also came to sell dollars on rises," said a US bank dealer in Tokyo.

But exporters were generally in no hurry to sell dollars, while importers speeded up their dollar purchases to cover their near-term requirements, making supply-demand conditions favour the dollar, said a bank dealer.

The dollar's downside was also supported on buying from trust banks and life insurers near 108.60 yen, dealers said.

Some dealers said the Australian dollar's strength was linked to issues of dual-currency samurai bonds, but others said it was related to a new Aussie dollar investment fund.

Dealers said the market was awaiting the release of US consumer price index (CPI) and retail sales data for an indication of the US interest rate outlook.

Although the US March producer price index on Thursday failed to affect the currency market, dealers said a sell-off in the US bond market following the CPI would hurt the dollar.

"The dollar has been turning a blind eye to the bond market, but if it keeps on falling and should the 30-year bond yield hit seven percent, we'll definitely see dollar selling," said a Tokyo dealer with a European bank.

News that Ford Motor Co will boost its stake in Japan's Mazda Motor Corp to 33.4 percent from about a quarter had little initial impact on the dollar, dealers said.

Some dealers had expected the dollar to come under downward pressure as the buying of the stake could cause yen buying against the dollar by Ford.

Under the deal, Mazda will also make an allocation of 144.1 million shares to Ford worth 52.3083 billion yen.

DEPOSIT RATES

SINGAPORE: Asian dollar deposit rates were quietly steady in lacklustre trade ahead of tonight's 1230 GMT release of the US March retail sales and consumer prices index data, dealers said.

Retail sales for March is forecast to show an increase of 0.3 percent compared with a 0.8 percent gain reported in February.

The consumer price index for March is expected to show a gain of 0.3 percent against February's 0.2 percent increase.

"Rates were a little bit mixed in the morning amid uncertainty over market direction", a local dealer said.

"Most people are waiting for tonight's retail sales and consumer price index figures for more clues to market direction. But I don't think there will be much impact here", he said.

In short dates, weekend and Monday/Tuesday were unchanged from Thursday's common 5-3/8 5-1/4 percent.

Week-fixed eased 1/16 point to 5-3/8 5-1/4 percent.

Among term rates, one-month was unchanged from Thursday's 5-1/2 5-3/8 percent. Six-months rose 1/16 point to 5-5/8 5-1/2 percent. Nine-months was unchanged at 5-3/4 5-5/8 and twelve-months unchanged at 5-7/8 5-3/4 percent.-Reuter