16 October 2001, 09:07  Major currencies frozen amid anthrax scares

By Hideyuki Sano
TOKYO, Oct 16 - Major currencies were pinned in a tight range on Tuesday morning, with uncertainty over the global economy holding back traders as the anthrax scare spread within the United States.
Also making traders reluctant to bet in any direction was the hazy outlook for the U.S. military operations in Afghanistan, which have crushed Taliban military targets but so far failed to capture September 11 attack suspect Osama bin Laden.
"If the Americans catch Osama bin Laden, the dollar will shoot up. On the other hand, if more anthrax patients emerge, the dollar will be under pressure," said Hajime Kawamura, foreign exchange manager at Sumitomo Corp.
"I don't think the market is going anywhere today."
The euro eased slightly against the yen on Japanese selling, which apparently was due to frustration over the single currency's repeated failure to break decisively above 110 yen.
The euro was changing hands at 109.54/62 yen , down slightly from 109.71 yen in late New York and almost a full yen lower than its level 24 hours earlier.
This pressured the euro against the dollar, with the euro trading at 90.73 cents , compared with 90.92 cents in late New York and 91.13 at the end of last week.
The dollar was down slightly against the yen at 120.75/80 yen , from 120.84 in late New York.
But dealers said trading ranges on Tuesday morning were extremely narrow and therefore they read little from the moves.
RESILIENCE?
The dollar is likely to be haunted by fears of further attacks amid the spreading anthrax cases, which U.S. President George W. Bush said could be linked to bin Laden, traders said.
It was revealed that letters laced with the bacteria were sent to Senate leader Tom Daschle's office, as well as other sites in New York, Nevada and Florida, and possibly in some other countries outside the U.S.
But traders also said the dollar seemed resilient against fresh attacks.
"The September 11 attacks came out of the blue and shocked the market. But now, with the U.S. at war, people are bracing for something bad," said Kawamura of Sumitomo Corp.
"So I don't think the dollar's fall is going to last for long."
Dealers said Japanese financial authorities were likely to intervene should the dollar fall sharply against the yen.
Finance Minister Masajuro Shiokawa said on Tuesday morning that he was extremely cautious about potential yen strengthening.
Hideyuki Tsukamoto, a manager at Fuji Bank's foreign exchange department, said the market might have priced in the shocks that September 11 would cause on the U.S. economy, pointing out that U.S. share prices had more or less recovered since the assault.
"People feel it's risky to keep selling the dollar, even if they're not ready to buy the dollar," said Tsukamoto.
For clues on the U.S. economy, dealers were also looking to Federal Reserve Chairman Alan Greenspan's testimony before Congress on Wednesday.

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