October 30, 2001	Tuesday	Shaba'an 12, 1422

TOKYO, Oct 29: The dollar slipped against the yen in Tokyo Monday on technical factors as weak Japanese industrial output data and a Bank of Japan decision to leave monetary policy unchanged were ignored, analysts said.

The dollar traded at 122.42-44 in Tokyo Monday, against 122.71-73 yen in New York and 122.60-62 yen in Tokyo late Friday.

The market was expecting a bad number for industrial production, said ABN Amro foreign exchange manager Toshihiko Masaki, noting the figure fell roughly in line with expectations.

After seeing the dollar didn’t bounce, what was bought was sold off again, said Masaki.

Japan’s industrial output in September fell 2.9 per cent from the previous month, the trade ministry said in a preliminary report on Monday.

Market traders expected a drop of 2.2 per cent, said HSBC foreign exchange manager Michiko Fukuda.

Analysts credited the yen’s consequent strengthening on technical movements.

European and US funds have been liquidating long positions (on the dollar) this morning, said Masaki. So long position adjustment pushed the yen higher.

Afternoon trading saw some buying of the dollar after it fell to 122.33 yen in the morning.

The level was little affected by the Bank of Japan’s announcement around 2:00 pm that it would leave its ultra-loose grip on monetary policy unchanged after a one-day policy board meeting.

There was practically no one who had expected the BoJ to do anything, said Asahi Bank trader Nobuaki Tani. I think there was little effect.

The Bank of Japan also said later in the day the world’s number two economy would shrink by as much as 1.2 per cent in the year to March.

Japan’s gross domestic product (GDP) would fall between minus 0.9 per cent and 1.2 per cent, contrasting with a prior forecast of 0.3pc to 0.8pc growth, the central bank said.

HSBC’s Fukuda said doubts about the greenback will linger as long as the war on terrorism continues.

The euro bought $0.8962-64 compared with $0.8923-25 in New York and $0.8938-40 in Tokyo late Friday. Against the yen, the euro was quoted at 109.74, against 109.59 in Tokyo Friday afternoon.

DBS Bank in Singapore said it expected the euro to firm against the greenback as the slew of economic data due out this week will confirm the United States is heading into a recession.

This week is an important test for the euro, the bank said in a report. In late Singapore trade, the dollar rose to 10,265 Indonesian rupiah from 10,250 on Friday.—AFP