* Dollar up vs yen as BOJ warns of further export woes
* Euro gains broadly; doubts about U.S. auto bailout loom
* Market expects ECB rate cut; policy-makers seem divided
(Updates prices, adds comment, changes dateline, byline)
By Steven C. Johnson
NEW YORK, Dec 22 (Reuters) - The dollar rose against the
yen on Monday after the Bank of Japan followed last week's
interest rate cut with a warning that the health of Japan's
economy has deteriorated and is likely to get worse.
But investors' equally dim view of the U.S. economy hurt
the greenback against the euro, which rose broadly in
holiday-thinned trade. Doubts about whether a U.S. automaker
bailout would steer the economy out of recession also hit the
dollar.
Traders said volumes were razor-thin in the lead-Up to the
Christmas holidays, aggravating even the slightest moves in the
currency markets. Still, many said demand for dollars remained
low.
"The dollar view is so opaque at the moment, and the risk
reward at this time of year is not worth it unless you really
have to trade," said Maurice Pomery, head of foreign exchange
at IDEAglobal in London.
The dollar managed to rise above 90 yen for the first time
in nearly a week after BoJ Governor Masaaki Shirakawa said yen
strength and a global slowdown may force Japanese exports still
lower even after a record plunge in November. For details, see
[].
"All Asian exporters are at risk in this global economic
slowdown, but Japan is at the top of the list," said Dustin
Reid, senior currency strategist at RBS Global Global Banking &
Markets in Chicago. "The stronger yen has been playing havoc
for Japanese exporters, and the auto companies in particular
are likely to be significantly affected."
So far this year, Japan's currency is up nearly 20 percent
against the dollar and more than 22 percent against the euro.
Early in New York, the dollar was changing hands at 89.85
yen <JPY=>, up 0.8 percent, after earlier rising to 90.23. The
BoJ cut Japanese interest rates last week to near zero.
The euro also rose 1.3 percent to 125.79 yen <EURJPY= and
added 0.5 percent to $1.3994 <EUR=> after earlier hitting a
session peak of $1.4123. Sterling fell 0.8 percent to $1.4814
<GBP=>, while the euro rose 1.1 percent to 94.35 pence
<EURGBP=>, near a record high of 95.56 pence touched last week.
A move by China's central bank to cut lending and deposit
rates by 27 basis points -- its fifth cut since September --
shed more light on the scope of the global slump.
[].
GRIM U.S. OUTLOOK
After coming under steady pressure in December, the dollar
rallied on Friday after the Washington announced emergency
loans for crippled General Motors <GM.N> and Chrysler.
But while the move averted a crisis for now, traders said
uncertainty over the companies' restructuring plans left many
doubting the long-term effect it would have on the economy.
Last week, the Federal Reserve cut benchmark interest rates
to near zero, underlining the severity of the economic crisis
and undermining support for the dollar.
Investors are also looking for the European Central Bank to
cut interest rates, currently at 2.5 percent, in January,
though ECB executive board member Lorenzo Bini Smaghi warned
about the risks of monetary policy being too lax, according to
the Rome newspaper Il Messaggero [].
(Additional reporting by Naomi Tajitsu; Editing by Jonathan
Oatis)
