TOKYO, Oct 15: The dollar slid in Tokyo Monday on fears of a further slump in the world’s number one economy amid concerns of prolonged US-led retaliation against terrorism and potential counterattacks, brokers said.

The greenback traded at 120.96-99 against 121.11 yen in New York and 121.32-35 in Tokyo late Friday.

There are still many uncertain elements in the United States, such as anthrax fears and continued US retaliation, said Daisuke Uno, a foreign exchange trader at Sumitomo Mitsui Banking.

Dollar-selling emerges easily whenever the currency has risen, he said.

Earlier in the day, the dollar firmed to around the 121-level helped by a weakness in Japanese equities and a fall in Japan’s current account surplus, traders said.

The finance ministry said the current account in August fell 27.1 per cent to $5.9 billion from 971.8 billion yen a year earlier.

Michiko Fukuda, a foreign exchange manager at HSBC, said movement was limited overall, with investors waiting for positive signs from the US to refuel wavering confidence in the country.

It is held in a tight range that won’t change unless we see a solid outlook in the US, said Fukuda.

Commerzbank foreign exchange manager Ryohei Muramatsu said although recent US consumer confidence data on Friday, which came in above expectations, was positive for the dollar:

The economic situation is not good at all. People are talking about recession.

Investors are also cautious ahead of a testimony by US Federal Reserve chairman Alan Greenspan, nervous he may voice concerns monetary easing risks inflationary pressure in the future.

Federal Reserve policymakers slashed the key interest rate earlier in the month by half a percentage point to 2.5 per cent, the lowest level in 39 years, to try to cushion the economy from the massive economic impact of the terrorist onslaught.

On the euro, Muramatsu said a decision by the European Central Bank last week not to cut rates has halted the chance of any recovery of recent highs.

The euro bought $0.9104-07 compared with $0.9107 in New York and $0.9030-33 in Tokyo late Friday.

Nervousness over escalating reports of anthrax-related illnesses in the US was affecting euro-dollar trading, a dealer with BNP Paribas said in Singapore.

The weekend reports of those anthrax-related cases are causing investors to play on the cautious side so people tend to sell the US dollar on this, he said.

Trading is still depending on the US-Afghanistan issue, the dealer said.

Against the yen, the euro was quoted at 110.05, compared with 110.14 in New York and 109.64 in Tokyo late Friday.

In late Singapore trading, the dollar weakened to 10,000 Indonesian rupiah from 10,015 on Friday, 51.7875 Philippine pesos from 51.8065, 1.8187 Singapore dollars from 1.8211, 44.63 Thai baht from 44.74 and 1,296.90 South Korean won from 1,299.25.

The greenback was stronger at 34.5450 Taiwan dollars from 34.5425.—AFP