TOKYO, Oct 30: The dollar weakened against major currencies in Tokyo Tuesday following falls in US stocks and looming grim data that could show the world’s biggest economy is headed for recession, analysts said.

The greenback traded at 121.80-82 yen here on Tuesday, against 121.94 yen in New York and 122.42-44 yen in Tokyo late Monday.

At this moment, the forex market purely depends on the US stock price movement, said Royal Bank of Scotland head of foreign exchange sales Kosuke Hanao.

They are taking profits in the US stock market... and in the forex market ahead of the big American figures coming later this week, Hanao said.

Stocks took a pounding in New York Monday amid concerns that the US economic downturn will be more severe than previously expected, and on worries about the protracted nature of the military campaign in Afghanistan.

The Dow Jones industrials tumbled 275.67 points or 2.9 per cent to 9,269.50, while the Nasdaq composite shed 69.44 points or 3.9 per cent to 1,699.52.

Reports on jobs, consumer confidence, manufacturing and third-quarter growth are due this week and they could point to a looming recession. The government Wednesday will provide its first estimate of US gross domestic product in the three months to September. This is expected to show a 1.3-per cent decline.

ABN Amro foreign exchange manager Toshihiko Masaki said that while market talk has focused on economic fundamentals, the movements are mainly technical position adjustments by short-term players.

The market started to liquidate long dollar positions built up after the recovery from the September 11, attacks, he said, adding that he expects the dollar to consolidate back to around 120.50 to 121.00 yen as short-term positions are squeezed out.

But the threat of further intervention by the Japanese finance ministry, reiterated this morning by Finance Minister Masajuro Shiokawa, is likely to halt further dollar declines beyond the 119-120 yen area, dealers said.

Shiokawa told a regular news conference Tuesday morning that the ministry is ready to take action if foreign exchange movements swing too much.

Japan’s Ministry of Finance repeatedly intervened through the Bank of Japan to weaken the yen in the weeks following the September 11 terror blitz.

But Hanao from the Royal Bank of Scotland said Shiokawa’s words and news that Japan’s unemployment rate hit a post-war high of 5.3 per cent in September, did not affect trading.

These figures and these comments are all discounted in the market I think, he said. On a short term basis, the Japanese factors are not the focus at the moment.

Meanwhile, the euro bought $0.9062-65 compared with $0.9050 in New York and $0.8962-64 in Tokyo late Monday.

The euro’s strength against the dollar was due to US stock falls and threats of new terrorist attacks on the US mainland or Washington’s interests abroad, a dealer with BNP Paribas said in Singapore.

Against the yen, the euro was quoted against 110.35 in New York and 109.74 in Tokyo Monday afternoon.

In late Singapore trade, the dollar rose to 10,345 Indonesian rupiah from 10,265 on Monday, 1,298.40 South Korean won from 1,294, and 34.5145 Taiwan dollars from 34.511.

It fell to 1.8254 Singapore dollars from 1.8325, 44.665 Thai baht from 44.83, and 51.92 Philippine pesos from 52.01. —AFP