Dollar under pressure in Asia
AFP | 09/26/2008 11:42 AM
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TOKYO - The dollar drifted lower in Asian trade Friday as political wrangling held up a proposed Wall Street bailout plan, dealers said.
The dollar slipped to 105.92 yen in Tokyo morning trade from 106.53 in New York late Thursday. The euro firmed to 1.4670 dollars from 1.4608 but eased to 155.49 yen from 155.65.
Markets were waiting impatiently for US Congress to pass the much debated$ 700 billion financial sector rescue package.
Hopes that a deal was imminent faded after top lawmakers from the two parties failed to clinch a deal in key talks at the White House.
"The plan's contents are unclear and markets are uncertain how it's going to play out," said Kenichi Yumoto, vice president of forex sales at Societe Generale.
Congress has been bickering over the proposal, with Democrat lawmakers trying to add amendments that would help troubled US mortgage owners while Republicans are opposing the slashing of Wall Street executives' pay cheques.
"Investors will be waiting to see the extent to which the original package has been watered down, potentially reducing its effectiveness in reviving lending and credit markets," NAB Capital strategists wrote in a research note.
"Speculation is that the final bailout plan will include dispersing the 700 billion dollars in instalments and limits on executive compensation at financial institutions seeking assistance," they added.
While the dollar could rise if Congress approves the rescue plan, the gains are likely to be short-lived due to concerns about the worsening US economy and public finances, Societe Generale's Yumoto said.
US durable goods orders and new homes sales fell sharply in August, while weekly jobless claims soared, the latest data showed.
"Amid these conditions it will be very difficult to be optimistic about the dollar," said Yumoto.
In Japan, inflation stayed at a decade high 2.4 percent in August, but markets see little chance of a rise in local interest rates any time soon.
