September 17, 2002	Tuesday	Rajab 9, 1423

LONDON, Sept 16: The dollar rose on Monday to its highest level against the euro since the beginning of August, after comments from a leading Japanese government official prompted a steep decline in the yen and boosted demand for the US unit across the board.

The single European currency stood at 0.9693 dollars against 0.9716 late on Friday in New York.

The dollar was being traded at 122.31 yen from 121.72 on Friday, having earlier traded up to 122.46 yen — its highest level in almost three months.

Analysts said the dollar continued to respond to comments by Japanese deputy finance minister for international affairs Haruhiko Kuroda, who on Friday touted the idea of using currency intervention to achieve an inflation goal.

Kuroda’s speech indicates to us that the government is becoming increasingly impatient with the current policy tools being used and may be shifting toward a more radical policy option, said Bank of Tokyo-Mitsubishi currency economist Derek Halpenny.

Halpenny said that although, as Kuroda had himself noted, such a policy of selling yen might be unpopular internationally, it was nonetheless significant that a senior member of the government had acknowledged such a policy option existed.

Increasing speculation that the (Japanese Prime Minister Junichiro) Koizumi government is exploring these more radical policy options will give the dollar/yen rate a substantial underpinning, Halpenny concluded.

The surge in demand for the dollar, triggered by Kuroda’s remarks, helped push the euro down to its lowest level against the dollar in over a month.

Analysts said data released Friday by the International Money Market exchange, part of the Chicago Mercantile Exchange, showing that speculators had been reducing their euro holdings was a further factor weighing on the single European currency.

And the euro was also having to contend with news that Germany’s Ifo research institute was considering lowering its economic growth forecasts for Germany.

The upturn has been interrupted. We are considering whether to lower our forecasts because we observe a clear slowdown in economic growth, Ifo president Hans-Werner Sinn told the Die Welt newspaper.

But Standard Chatered economist David Mann believes that with the US trade deficit at record levels, the recent improvement in the dollar’s fortunes is unlikely to persist.

I don’t think it’s a trend that will last for long. I do think we’ll continue to see the dollar weakening again, Mann said.

The euro was changing hands at 0.9693 dollars against 0.9716 late on Friday in New York, 118.61 yen from 118.20, 0.6273 pounds (0.6264) and 1.4685 Swiss francs (1.4685).

The dollar was being quoted at 122.31 yen (121.72) and 1.5148 Swiss francs (1.5114).

The pound was at 1.5453 dollars (1.5504), 189.07 yen (188.63) and 2.3410 Swiss francs (2.3435).

On the London bullion market, the price of an ounce of gold fell to 316.50 dollars from 318.85 late on Friday. —AFP