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Dollar falls in Asia as stocks surge on hopes over US policy

In Uncategorized on October 14, 2010 at 2:27 pm

HONG KONG, Oct 14, 2010 (AFP) – The dollar fell to a new 15-year low against the yen Thursday and Asian stocks posted strong gains on growing expectations of new pump-priming measures in the United States.


The greenback dipped to 81.28 yen in early Tokyo trade, its worst showing since April 1995, while it was also under pressure from the euro and Singapore dollar.


Despite the dollar’s continued weakness against the yen Tokyo’s Nikkei stock index was 1.82 percent higher by the break as resource firms were lifted by surging commodity prices.


Traders are banking on the US Federal Reserve to introduce further monetary easing at its next policy meeting as it tries to kickstart recovery in the sluggish economy.


Hong Kong was 1.31 percent higher, Sydney added 1.55 percent, Shanghai gained 1.85 percent and Seoul was up 0.85 percent, while Singapore advanced 0.38 percent.


BBY senior institutional trader Peter Copeland said: “As long as China remains on track and QE2 (quantitative easing) underpins the US economy and commodity prices, while sending the US dollar down, I see further upward momentum for equities.”


“You now have this perverse situation where bad economic news in the US is good news for equities because it supports the case for QE2,” he told Dow Jones Newswires.


Minutes from last month’s meeting of the Fed’s Open Market Committee said the central bank was prepared “to provide additional accommodation if needed” to help the economy.


The dollar’s losses have been capped, however, by threats from Japanese authorities that they would intervene again in currency markets to sell the yen.


The Bank of Japan last month stepped into the markets for the first time in six years as the dollar hit 82.86 yen. A strong yen hurts exporters as it makes them less competitive while also cutting their profits when repatriated.


A 0.69 percent rise on the Dow Wednesday provided Asian dealers with the impetus to continue buying as Wall Street welcomed a strong set of quarterly corporate data.


The dollar came under broad selling pressure on Thursday with the Singapore dollar surging against the US unit after the city-state’s central bank announced a surprise tightening of monetary policy.


The Monetary Authority of Singapore made the announcement after the government said the economy was likely to expend between 13 and 15 percent this year, leading to concerns over rising inflation.


Singapore’s monetary policy is conducted via the local currency, which is traded against a basket of currencies of its major trading partners within an undisclosed exchange rate band.

The weaker dollar sent commodities higher, with gold hitting a new high, opening at 1,376.00-1,377.00 US dollars an ounce in Hong Kong, up from Wednesday’s close of 1,359.00-1,360.00 dollars.


And on oil markets New York’s main contract, light sweet crude for November delivery, gained 71 cents to 83.72 dollars a barrel.


Brent North Sea crude for delivery in November advanced 53 cents to 85.17 dollars on its last trading day.

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Source: SGGP

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