May 29, 2002	Wednesday	Rabi-ul-Awwal 16,1423

LONDON, May 28: The dollar slid back within sight of eight-month lows against the euro as concerns over the strength of the US recovery resurfaced ahead of US consumer confidence data due later on Tuesday.

But the yen’s rise against the greenback was capped by the threat of intervention from Japan, which is concerned that the strength of its currency, which rose to 5-1/2 month highs last week, will derail its fragile export-led recovery.

There’s growing confidence in the view that the dollar has turned. But there is limited scope for yen appreciation because of the Ministry of Finance, said Ryan Shea, senior international economist at BankOne.

The dollar stood at 124.50 yen slightly weaker on the day but up almost a yen from levels at which the Bank of Japan bought dollars on Wednesday and Thursday of last week.

The dollar was down more than half a per cent at $0.9255 per euro, moving back within sight of last week’s eight-month low of $0.9280.

The dollar has fallen over six per cent against the yen and five percent against the euro since the beginning of April as concern over the sustainability of the US recovery has dimmed the allure of US assets.

The market is showing no signs that it has finished with taking the dollar down, said Russell Jones, head of foreign exchange research at Lehman Brothers.

The market was waiting for US Conference Board consumer confidence data for May. Analysts polled by Reuters predicted the index would rise to 109.0 from 108.8.

Japan’s Finance Minister Masajuro Shiokawa kept threats of further intervention alive, saying he would monitor fluctuations in the foreign exchange market with vigilance.

The movement from yen weakness to yen strength was too drastic. I don’t think the current market conditions will stabilise, he told a news conference.

Second-guessing on whether and when the Bank of Japan will intervene has made the market reluctant to sell dollars, but there is no good reason to buy, said Nick Parsons, currency strategist at Commerzbank.

Uncertainty often encourages investors to repatriate assets, which tends to hurt the greenback as the US runs a huge current account deficit.—Reuters