By Chikako Mogi
TOKYO, March 4 (Reuters) - The dollar edged up from record
lows against the euro and a basket of currencies on Tuesday after
euro zone officials expressed concerns about the sharp rise of
the single European currency.
The euro's surge prompted verbal intervention by euro zone
finance ministers as well as European Central Bank President
Jean-Claude Trichet on Monday.
Jean-Claude Juncker, chairman of the Eurogroup of finance
ministers, said the ministers and Trichet had discussed exchange
rate policy at length and agreed to express concerns about
excessive moves. Trichet stressed that Washington favoured a
strong dollar. []
"The reiteration of the strong dollar policy is just to
reinforce confidence in the U.S. currency," said Naomi Fink, a
yen analyst at Bank of Tokyo-Mitsubishi UFJ. "It seems that some
panic has been allayed for now."
The euro has gained nearly 3.5 percent against the dollar in
the past week, while the U.S. currency has tumbled 5 percent
versus the yen on expectations the Fed will keep cutting interest
rates aggressively to fend off a recession.
Meanwhile, the Australian dollar fell more than 1 percent
after the country's central bank lifted interest rates by 25
basis points to a 12-year high of 7.25 percent but acknowledged
some signs that growth was cooling. []
The Aussie had dipped before the RBA decision after data
showing soft retail sales in January suggested steep energy and
borrowing costs were starting to pinch consumers.
The dollar inched up 0.1 percent to 103.35 yen <JPY=> on
Tuesday but hovered near a three-year low of 102.60 yen hit on
Monday.
The dollar has been battered across the board since Federal
Reserve Chairman Ben Bernanke last week signalled a readiness to
further cut interest rates to avert a recession.
The euro slipped 0.1 percent to $1.5185 <EUR=>, while the
single currency recovered against the yen to trade at 157.00 yen
<EURJPY=R> after falling below 156 yen for the first time in
about three weeks on Monday.
The dollar's trade-weighted index against six major
currencies was 73.733 <.DXY>. It hit 73.354 on Monday, its lowest
level since it was created in 1973.
The Aussie fell more than 1 percent against the U.S. dollar
and the yen after Reserve Bank of Australia Governor Glenn
Stevens noted "tentative evidence" that household demand was
moderating.
Stevens also acknowledged that past rate hikes coupled with
rising borrowing costs due to the credit crunch had led to a
"substantial" tightening in financial conditions.
The Aussie was down 1.2 percent at $0.9283 <AUD=D4>, pulling
further away from a 24-year high hit last week.
SHORT-LIVED RESPITE?
Traders said the dollar's respite was likely to be
short-lived as many players see further scope for the U.S. unit
to fall and momentum could build for fresh dollar selling if
upcoming data, including Friday's U.S. jobs figures, proved
disappointing.
"The market is in the early phase of the last stage in the
bear dollar trend, and needs one or two more dips before the
dollar finds a firm near-term bottom," said a senior trader at a
Japanese trading firm, adding that he expected selling to
intensify later this week and into next week.
Short-term interest rate futures showed about a 75 percent
perceived chance of the Fed lowering its benchmark overnight
lending rate by 75 basis points from 3 percent, which would
further reduce the allure of the dollar in favour of
higher-yielding currencies.
The Fed's Bernanke speaks later on Tuesday and analysts
expect he will reiterate his willingness to cut rates.
(Additional reporting by Naomi Tajitsu)
