February 20, 2003	Thursday	Zul Hijjah 18, 1423

LONDON, Feb 19: The dollar dropped on Wednesday, weighed down by growing uncertainty over the prospects for war in Iraq after a British press report said Britain was pressing Washington to give UN weapons inspections more time.

The single European currency was being traded at $1.0723 from 1.0683 late on Tuesday in New York.

The dollar fell to 118.84 yen from 119.00 on Tuesday.

Commerzbank currency strategist Nick Parsons said the dollar continued to be undermined by lingering uncertainty over the geopolitical outlook.

Nearly all the risks are still skewed towards the dollar downside. It’s hard to conceive of a scenario where the dollar rallies more than one or two per cent from here, Parsons said.

The US unit was also under pressure against the Japanese yen despite growing caution by investors over the prospects for intervention by the Bank of Japan.

Earlier Kazuhiro Kaneko, a dealer at Trust and Custody Services Bank in Tokyo, said investors were cautious of pushing the dollar below the 119-yen level because of possible intervention by the government.

Japanese authorities are keen to stem the yen’s recent rise to boost the competitiveness of Japanese exports and help alleviate pressure on the stricken Japanese economy.

Among other leading currencies sterling was steady as the market reacted calmly to the release of minutes of the Bank of England’s monetary policy meeting earlier this month at which rates were unexpectedly cut by 0.25 basis points.

The minutes showed the bank’s rate setters voted by a seven-to-two majority to reduce benchmark rates to 3.75 per cent.

Parsons said the margin of the vote left the way open for further rate cuts.

He said the central bank’s quarterly inflation report published last week had been so negative that policy has probably not been rebalanced just by cutting 25 basis points off rates and we will probably see the pound weakening further.

The euro was changing hands at 1.0723 dollars from 1.0683 late on Tuesday in New York, 127.43 yen (127.08), 0.6721 pounds (0.6714) and 1.4720 Swiss francs (1.4704).

The dollar was being quoted at 118.84 yen (119.00) and 1.3725 Swiss francs (1.3762).

The pound was at 1.5946 dollars (1.5902), 189.47 yen (189.23) and 2.1888 Swiss francs (2.1909).

On the London Bullion Market, the price of an ounce of gold inched up to $344.85 from 344 late on Tuesday.

TOKYO: Japanese Prime Minister Junichiro Koizumi on Wednesday voiced support for a weak yen against the dollar, news reports said.

For the Japanese economy, a weak yen is desirable, Koizumi was quoted by Jiji Press as telling reporters.

The economy is stagnant and the fiscal condition (of Japan) is also stagnant, but the yen is rising, Koizumi said.

It means people in foreign countries evaluate Japan more highly than the Japanese, he said.

The dollar was quoted at 119.01-04 yen compared with at 119.02-05 yen earlier in the day and 119.00-10 yen in New York on Tuesday. —AFP