November 6, 2001	Tuesday	Shaba’an 19, 1422

TOKYO, Nov 5: The dollar rose slightly against the yen and euro in Tokyo on Monday as traders anticipated a rate cut by the United States Federal Reserve this week but gains were capped in directionless trade, analysts said.

The greenback traded at 121.73-75 yen against 121.63 yen in New York and 121.50-52 yen in Tokyo late Friday.

This week, the market is watching for a rate cut from the FOMC (Federal Open Market Committee) and also the ECB (European Central Bank), said Koji Fukaya, chief analyst of the foreign exchange and treasury division of Bank of Tokyo-Mitsubishi.

That would be good news for stock markets. So maybe the upward pressure will continue on the United States stock market and the US dollar, Fukaya said.

The Fed is due to meet Tuesday to discuss rates in the world’s number one economy.

People are confident about the recovery of the US economy by the middle of next year, Fukaya said, adding the markets had shrugged off grim data from the US last week which showed the unemployment rate jumped to 5.4 per cent in October its highest level since December 1996.

DBS Bank in Singapore agreed with the positive outlook for the dollar.

We believe the balance of events and economic numbers this week are stacked in favour of the dollar, the bank said.

Lehman Brothers head of foreign exchange Hiroyuki Mukaibo said the dollar has benefited from interest from Japanese investors seeking to acquire overseas assets after the fiscal half-end in September.

However, the dollar buying is half-hearted, with investors “mixed-up” over market direction due to economic and military uncertainties.

There’s no clear success in Afghanistan so you cannot buy the dollar but can you buy the yen? Can you buy the euro? No way!

Mukaibo said both the euro and yen seem vulnerable, even in the face of dollar-negative signals.

There may be temporary dollar buying (but) the bottom line is people don’t have confidence in the dollar very aggressively. It’s difficult to pick which is the worst currency, he said.

After September, Japanese have been buying back the dollar and supporting the currency, he said, with concerns seriously bad news for the Japanese economy and financial system could appear ahead of the fiscal year-end in March.

Investors were equally downbeat on the euro, with a long-awaited rate cut by the ECB expected Thursday unlikely to trigger fresh interest in the currency, analysts said.

I don’t think it really matters now. It’s not going to be positive, Mukaibo said, adding simply that euro-long positions have been gradually taken out so there may be support at low 89 cents.

The euro bought $0.8985-87 compared with $0.9029 in New York and $0.9044-46 in Tokyo late Friday.

Fukaya agreed a rate cut would be largely discounted as the economy in Europe is sliding as fast as in the US.

Last week, production data in the euro zone showed a pullback. So it showed the euro economy is retreating as much as the US, he said.

DBS Bank said while the Fed is unlikely to disappoint the market, the ECB has only an even chance of easing.

In addition, economic numbers from Germany’s employment report, factory orders and industrial production are likely to show the economy is entering into a recession.

Against the yen, the euro was quoted at 109.40, against 109.81 in New York and 109.96 in Tokyo Friday afternoon.

In late Singapore trade, the US dollar fell to 51.910 Philippine pesos from 51.9650 on Friday, 44.6850 Thai baht from 44.7250, 1.8178 Singapore dollars from 1.8299 and 34.5230 Taiwan dollars from 34.5260.

The greenback advanced to 10,860 Indonesian rupiah from 10,645 and 1,296.050 South Korean won from 1,294.6750.—AFP