LONDON, Feb 18: The dollar was steady against other leading currencies on Monday, after the yen recovered from a brief fall triggered by an apparent gaffe by US President George W. Bush.

The single European currency was quoted at 0.8729 dollars against 0.8734 dollars late on Friday in New York.

The dollar changed hands for 132.65 yen from 132.61 on Friday.

With US markets shut for the Presidents’ Day holiday, trading volumes were expected to be light.

But there was some excitement in Tokyo trading as the Japanese currency lurched lower after Bush said that Japanese Prime Minister Junichiro Koizumi had talked to him about “devaluation.”

He talked about non-performing loans, the devaluation issue and regulatory reforms. He stressed all three with the same importance, Bush told a news conference after the pair held a summit in Tokyo.

But dealers later concluded that the gaffe-prone US president had probably in fact meant to say “deflation,” a key issue for the recession-ridden Japanese economy.

The dollar/yen immediately went higher when it came out that he had said devaluation, it caused a bit of a panic and people sold the yen on the headline, said a trader at Barclays Capital in Tokyo.

But very soon after people realised that perhaps he meant to say deflation but got confused, she said.

So there was an initial spark reaction but as soon as people thought about it (they realised Bush had made a mistake) and the dollar reversed back to its former levels.

That left the dollar holding steady against both the yen and euro, with little in the way of data expected to drive markets.

The euro was being traded at 0.8729 dollars from 0.8734 in New York late on Friday, at 115.80 yen (115.83), 0.6090 pounds (0.6100) and 1.4818 Swiss francs (1.4823).

The dollar was at 132.65 yen (132.61) and 1.6985 Swiss francs (1.6972).

Sterling bought 1.4334 dollars from 1.4316 in New York, 190.14 yen (189.84) and 2.4346 Swiss francs (2.4300).

The price of gold slipped to 298.10 dollars an ounce from $299.85 late on Friday.—AFP