Dollar slips versus yen

TOKYO (October 01 2009): The dollar slipped against the yen on Wednesday towards an eight-month low marked earlier this week as Japanese exporters sold the US currency to settle business before the quarter ends later in the day. The dollar's slide was broad with the Australian dollar striking a 13-month peak against the greenback after strong retail sales data added to the case for a rise in interest rates as early as November.

Sterling rose against the dollar after an index for consumer confidence posted its biggest monthly jump in more than 14 years in September. Dollar/yen was whipped around by flows related to the end of the quarter, as well as Japan's fiscal half-year on Wednesday. The pair rose in early Asian trade as Japanese importers bought dollars. But the greenback soon erased gains as such corporate demand faded quickly.

"The market is dominated by quarter-end flows from companies and position-squaring by investors, temporarily lacking a clear sense of direction," said Tsutomu Soma, senior manager of foreign securities at Okasan Securities. "But the dollar will stay in a downtrend in the longer-term, with some looking for a chance to sell it on rebounds," Soma said.

The dollar slipped 0.4 percent from late US trade to 89.65 yen, erasing earlier gains to 90.42 yen on trading platform EBS and falling towards an eight-month trough near 88.20 yen hit on Monday. On the quarter, the dollar plunged nearly 7 percent against the yen. Japanese Finance Minister Hirohisa Fujii said on Tuesday the government may take action if currency moves were irregular, backtracking on earlier comments that suggested authorities were comfortable with a rising yen. A senior trader for a major Japanese bank said Japanese exporters who had delayed selling the dollar were now suffering with dollar/yen below 90 yen just ahead of the closing of their forex-linked book for the half-year end.

The euro inched up 0.2 percent to $1.4620, having climbed over 4 percent so far in July-September. Against the yen, the euro was down 0.3 percent at 131.05 yen, but well above a two-month low of 129.84 struck on Monday on EBS. The Australian dollar climbed 0.8 percent to $0.8781, having struck a 13-month high of $0.8805 after the release of data showing Australia's retail sales grew 0.9 percent in August from the previous month, faster than a forecast 0.5 percent rise. Sterling rose 0.3 percent to $1.6010.

As investors chased higher-yielding currencies this quarter, the Aussie jumped more than 9 percent against the dollar from the previous quarter.