December 12, 2001	Wednesday	Ramazan 26, 1422

TOKYO, Dec 11: The dollar fell after hitting an eight-month high against the yen here on Tuesday in cautious trade ahead of an expected US interest rate cut and the release of a Japanese business confidence survey, dealers said.

The greenback was quoted at 125.94-97 yen down from 126.07 yen in early trading, its highest level since fetching 126.30 yen on April 4.

The rate compared with 126.05-07 yen in New York and 125.82-84 yen in Tokyo late Monday.

The dollar fell slightly on profit-taking and selling from exporters. But trading remains very quiet in Tokyo ahead of the FOMC (Federal Open Market Committee) meeting and the (Bank of Japan’s) Tankan survey, said Naoya Murata, a dealer at Sanwa Bank.

The US central bank will hold a policy meeting later in the day and is widely expected to announce a quarter percentage point interest rate cut.

On Wednesday, Japan’s central bank will release its closely-watched quarterly Tankan survey of business confidence. Investors expect worsening business sentiment after recent confirmation the Japanese economy slipped back into recession in the third quarter to September.

Japan’s gross domestic product in the three months to September fell 0.5pc from the previous quarter and dropped 2.2pc on an annualised basis.

Daiwa Securities SMBC forecast the Tankan index of large manufacturers’ confidence would fall sharply to minus 44 in the December survey, from minus 33 the previous quarter.

The index of large non-manufacturers’ confidence will decline to minus 29 from minus 17, predicts the brokerage house.

The indices measure the difference between firms saying economic conditions are favorable and those saying they are not. A negative figure means a majority of firms believe conditions are unfavourable.

Meanwhile, the euro bought $0.8912-15 against $0.8906-08 in New York and $0.8915-17 in Tokyo late Monday.

The dollar is expected to weaken against the euro if the Federal Reserve cuts interest rates as anticipated, DBS Bank in Singapore said.

Ultimately, the interest rate advantage in Euroland will sink in and the dollar will have to weaken against the euro, the bank said.

Against the yen, the euro was quoted at 112.33 around 5:00 pm, compared to 112.20 in New York and 112.19 in Tokyo Monday afternoon.

In late Singapore trade, the dollar retreated against most Asian currencies.

It fell to 43.770 Thai baht from 43.875 on Monday, 10,205 Indonesian rupiah from 10,285, 1.8322 Singapore dollars from 1.8338, 1,277.60 South Korean won from 1,282.65 and 34.4545 Taiwan dollars from 34.4575.

The greenback advanced to 51.950 Philippine pesos from 51.945.—AFP