960402

Dollar

shows firmness against

yen, mark

NEW YORK: The dollar ended firmer versus the yen and mark amid concerns about Japan's financial system and hopes for a Bundesbank rate cut, dealers said on Monday.

Long-term Credit Bank of Japan announcement on Monday that U.S. authorities were investigating its New York-based unit for improper bond trades and an announcement late last week that Taiheiyo Bank would be liquidated left some investors wondering if the latest news is just the tip of the iceberg.

It's definitely a legitimate concern," said Michael Faust, a portfolio manager at Bailard, Biehl and Kaiser.

The problem for non-Japanese investors is concern about transparency - the difference between what's actually going on in Japan's financial sector as opposed to what's being revealed publicly, Faust added.

The dollar ended at 107.53/58 yen, up from 107.43/53 at the open. It rose to 1.4830/40 marks from 1.4805/10. Dealers deemed the close above 1.4820 marks an upbeat sign.

"It will be seen as a positive because it will have taken out what has been a resistance level capping us out on upward moves recently," said Hillel Waxman, a first vice president of foreign exchange at Bank Leumi Trust Co of New York.

A favorable interest rate outlook also continues to underpin the dollar against some European currencies such as the mark as some traders are betting Buba will lower rates at its next council meeting in mid April.

"We are still looking at the fact that the Germans will lower interest rates," Waxman said. "And certainly, I think, the market focus is that the Fed is not leaning towards easing at this point."

Buba left official rates unchanged last Thursday at its bi-weekly council meeting and left the repo rate at 3.30 percent for the next three tenders.

The dollar was expected to be supported against the yen amid talk of bids from Japanese corporations near 107.35 yen, according to dealers.

Meanwhile, the greenback's upside might prove to be limited.

"There are rumors of options-related sell orders right around 108 (yen)...," said Adam Adelman, a trader at Dai-Ichi Kangyo Bank, adding that 108 should cap any short-term gains.

With the Japanese fiscal year ended on March 31, hopes the new fiscal year will bring a flood of Japanese money into overseas assets also supported the dollar.

"Obviously what seems to have made the break for the dollar was really just the start of a new fiscal year for the Japanese and the market's assumption that capital outflows will continue to be encouraged by the various ministries (such as the Bank of Japan and the Ministry of Finance)...," Waxman said.

Elsewhere, the dollar ended at 1.1942/49 Swiss francs, up from 1.1940/50 at the open. It rose to Canadian $1.3545/50 from C$1.3542/47. Sterling fell to $1.5240/47 from 1.5250/60. The Australian dollar ended at $0.7843/48.-Reuter