December 8, 2001	Saturday	Ramazan 22, 1422

TOKYO, Dec 7: The dollar hit a four-month high against the yen on Friday after gross domestic product (GDP) data showed Japan had fallen into its third recession in a decade, dealers said.

The greenback traded at 124.90-93 yen off a high of 125.00 yen earlier in the afternoon, but up from 124.60 yen in New York and 124.65-68 yen in Tokyo late Thursday.

The headline (GDP) figure confirmed Japan was bad, but when you look at the details you can see it’s dreadful, said a foreign exchange manager at Barclays Capital. The dollar last breached the 125-level on August 1.

Japan’s GDP in the three months to September fell 0.5 percent from the previous quarter, when the world’s second largest economy shrank a revised 1.2 percent, the government said Friday.

Two consecutive quarters of contraction are commonly defined as recession.

Immediately after the release (of the GDP figures) the market reaction was really dull, said Fuji Bank foreign exchange manager Hideyuki Tsukamoto.

He added, But even if you say it was well within expectations, bad news is bad news and it proved to be an opportunity to sell the yen.

The news was as bad as expected, said Kenneth Landon, senior currency strategist at Deutsche Bank, adding sentiment for the yen was already on tenterhooks following Thursday’s collapse of mid-sized general constructor Aoki Corp.

What people are waiting for is for the next shoe to drop, meaning, What else is out there?’ Landon said.

What’s really of concern is what it may indicate about other companies in the sector. It’s very difficult to be positive towards the yen in this kind of environment.

Speculation the Bank of Japan might buy foreign assets to help weaken the yen also supported the dollar, said Dresdner Bank head of foreign exchange Marito Ueda.

Finance Minister Masajuro Shiokawa said earlier the government was considering buying new US government bonds.

But Sanwa Bank vice president of foreign exchange Satoshi Tate said the dollar would be hard pushed to break the 125-yen level. Generally, it’s before Christmas and the end of the year so people are quite conservative.

Euro-dollar trade was adrift as investors awaited the latest data from the US economy non-farm payrolls expected to be released later today, a dealer in Singapore said.

The euro bought $0.8937-40 against $0.8948 in New York and $0.8875-78 in Tokyo late Thursday.

We expect trading to continue to drift without any clear direction between 0.8920 and 0.8960 until the figures (are released), a dealer with BNP Paribas said.

Against the yen, the euro was quoted compared to 111.60 in New York and 110.67 in Tokyo Thursday afternoon.

Landon attributed the recent rise of the euro against the yen to some Japanese traders’ belief the European Central Bank would do all it could to ensure a strong euro before the introduction of notes and coins in the new year.

I think they’re looking for a year-end rally on the expectation that the ECB will intervene if necessary in order to maintain euro strength going into the conversion of the notes and coins in January, he said.

However, he expected no further rate cuts, following the ECB’s decision to leave policy unchanged on Thursday. They have a way of disappointing the markets, he said.

In late Singapore trade, the dollar fell to 51.945 Philippine pesos from 51.960 the previous day, 43.80 Thai baht from 43.855, 10,380 Indonesian rupiah from 10,425, 1.8312 Singapore dollars from 1.8349 and 1,273.25 South Korean won from 1,274.00.

The greenback rose to 34.4535 Singapore dollars from 34.449.—AFP