The euro and dollar firmed against the yen in Asian trade Tuesday
despite continuing worries over European debt woes and the failure of US
lawmakers to agree on a deficit-busting plan.
The euro traded at
103.87 yen in Tokyo trade, edging up from 103.83 yen late Monday in New
York. The single currency stood at $1.3480 compared to $1.3494.
The dollar also firmed to 77.06 yen in Tokyo trade from 76.94 yen.
"There are still some stop-loss orders that aren't executed yet, so the pair (dollar/yen) may rise a bit more," one trader said.
Nobuyoshi
Kuroiwa, deputy general manager of the forex team at Hachijuni Bank,
said the move was also in part a sensitive reaction to mixed reports
about remarks made by Finance Minister Jun Azumi.
Azumi during a
parliamentary panel dismissed an idea that Japan could buy large amounts
of foreign bonds as a form of intervention.
The proposal,
floated by former Bank of Japan official Kazumasa Iwata, is that the
government establish a yen-denominated fund worth 50 trillion yen to buy
overseas securities. This would necessarily involve selling the yen.
Azumi
said "there is a high possibility (such foreign-bond buying) would be
tantamount to currency-market intervention," and that the idea of
foreign bond purchases "doesn't fit well with our thinking," since the
purpose of intervention is to counter disorderly market moves.
Traders
said they were initially confused by the way the remarks were reported.
At first they thought Azumi was for the deal, which turned out not to
be the case.
"We jumped on the greenback, but were forced to dump it seconds later," said a senior dealer, according to Dow Jones Newswires.
Japan
intervened in the market unilaterally in late October, the first time
since August, after the dollar hit a post-war low of 75.32 yen.
The
euro had fallen against the dollar in New York, in a cautious market
the day after an election victory for Spain's conservatives and as
investors fretted about debt in the United States and Europe.
"The
sovereign-debt problems in Italy and Spain could remain a major theme
for the currency market," Kengo Suzuki, forex strategist at Mizuho
Securites, said.
In Europe, Spain's right stormed to its biggest
election victory ever on Sunday, winning over voters but sending Spain's
stockmarket falling and the cost of its debt surging over worries it
will not stick to its bailout programme commitments.
Market nerves
were also jangled after a US Congress "supercommittee" announced Monday
it had failed to reach a debt deal, after angry partisan battles over
the best way to revive the economy.
It confirmed widespread
expectations that the 12-member committee would fail in its mission to
cut US deficit by $1.2 trillion over 10 years amid political feuds over
tax hikes on the rich and cuts to social spending.
Azumi said
Tuesday financial markets were "very disappointed" over the failure of
the US congressional committee to reach a deal.
The benchmark
Nikkei 225 index at the Tokyo Stock Exchange, which closed at its lowest
level since March 2009 on Monday, opened down 1.01 percent.
The index then recovered some lost ground as the dollar rose, closing down 0.40 percent.
The dollar was largely higher against other major Asian currencies.
It rose to 1,146.90 South Korean won from 1,138.80 on Monday, to Sg$1.3017 from Sg$1.2990, and to 31.18 Thai baht from 31.03.
The
US unit also firmed to 9,115.00 Indonesian rupiah from 9,050.00 and to
Tw$30.31 from Tw$30.25. It was flat at 43.33 Philippine pesos.
