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Dollar higher in Asia on credit crunch
The dollar was higher in Asian trade on Wednesday as risk-averse investors turned to the greenback as a safe haven in the fast-moving global financial crisis, dealers said.
The dollar was higher in Asian trade on Wednesday as risk-averse investors turned to the greenback as a safe haven in the fast-moving global financial crisis, dealers said.
The dollar strengthened to 106.45 yen in Tokyo morning trade from 106.11 in New York late Tuesday. The euro firmed to 1.4135 dollars from 1.4092 but was still down sharply from earlier this week.
The euro edged up to 150.42 yen from 149.55.
Demand rose for the dollar as "funding from banks and the raising of money on the markets are not functioning properly," said Yosuke Hosokawa, forex chief at Chuo Mitsui Trust Bank.
"Due to the inability to steadily obtain funds, markets have found themselves in a situation where they are unable to take risks. The dollar's movement is based on supply," he added.
Although central banks have injected billions of dollars into markets recently, investors at times of stress tend to pour their money into the safest alternatives they can find -- which many people still regard are US Treasury bills, notes and bonds.
The Bank of Japan pumped 800 billion yen (7.5 billion dollars) in emergency funds into the money market Wednesday, the 11th straight business day it has injected funds to keep cash flowing.
Market players were cautiously optimistic of a new US bailout plan for the banking sector after the House of Representatives voted down a 700-billion-dollar package.
The congressional failure sparked the worst one-day sell-off in Wall Street history on Monday. But US share prices rebounded overnight and Asian stock markets were up in early trade Wednesday.
"Markets continue to worry ahead of the bailout plan's approval, as there are mounting fears over the health of US finances, and persistent worries over the banking sector," Hosokawa said.
Investor confidence has been pummeled in recent weeks as trusted Wall Street firms crumbled under the credit crisis while others were taken under federal control.
Markets "have lost the measuring stick to gauge whether the situation is safe or not, so they prefer to just hold on to their money," Hosokawa said.
Markets were little impacted by Japanese data that showed business confidence among major manufacturers fell into negative territory for the first time in five years. Previous data had already shown Japan slipping towards recession.
