30 April 2002, 09:40 Forex - Dollar lower in midafternoon Tokyo on fears over recovery, deficit
TOKYO (AFX-ASIA) - The dollar resumed its downward trend in
midafternoon trade after a mild bounce in the morning on continued
fears over the US economy, financial markets and current account
deficit, dealers said.
"People are worrying about the huge deficit in America ... and the
excessive optimism in the US recovery," Ryohei Muramatsu, treasury and
forex division manager at the Tokyo branch of Commerzbank, said.
"If the economies in Japan and Europe are recovering then the flows
will stay in their own countries. The New York stockmarket is very weak
but the Nikkei's stable," he said. "The upside potential for the dollar
is very limited."
US Treasury Secretary Paul O'Neill's testimony tomorrow to the
Senate on the US foreign exchange policy is unlikely to provide any
shocks, Muramatsu said.
"He will never change these words because there is reality and the
public stance," he said, but added that the US government will allow
the dollar to depreciate if it becomes necessary.
In the meantime, the dollar is strongly supported at the 127.25 yen
level on a technical basis, followed by the year's low of 126.36 yen,
with resistance seen at 128.35.
The euro is also rising against the dollar, but traders are seen
remaining wary over the currency after countless earlier
disappointments.
"The euro is very difficult to predict because so many times we
were disappointed," Muramatsu said.
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