Dollar rebounds in Asian trade


Posted at Jun 09 2008 11:21 AM | Updated as of Jun 09 2008 07:21 PM

Agence France Presse

TOKYO - The dollar rebounded slightly in early Asian trade on Monday after plunging at the end of last week on news of a jump in the US unemployment rate, dealers said.

The dollar firmed to 105.17 yen in late Tokyo morning trade from 104.90 in New York late on Friday.

The euro slipped to 1.5770 dollars after 1.5777 but rose to 165.83 yen against 165.55.

"As the stock markets are falling, investors are wavering between selling the greenback and buying it back," said Yuya Koike, a forex dealer at Hachijuni Bank.

Japanese share prices were down more than two percent by the lunch break on Monday, after sharp falls on Wall Street on Friday.

The weaker dollar contributed to a record jump in crude oil prices in New York of more than 10 dollars a barrel on Friday, adding to concerns about the outlook for the global economy.

The oil price rally and the bleak US jobs report triggered the worst day on US stock markets in 15 months as the Dow Jones index plummeted 3.1 percent Friday.

The US jobless rate jumped to 5.5 percent in May as the world's largest economy lost 49,000 jobs, official figures showed.

Most economists had expected a sharply lower unemployment rate of 5.1 percent. The increase was the largest monthly change since February 1986.

Analysts said the yen could benefit from renewed investor jitters as speculators unwind risky "carry trades" that involve borrowing cheap credit in Japan to invest in higher yielding assets elsewhere.

The yen may rise if stocks decline "as equity markets begin to weigh up (a) worsening trade-off between growth and inflation facing central banks," Barclays Capital analysts wrote in a note to clients.

"We think that the foreign exchange and equity markets may be particularly sensitive to upside surprises in inflation data this week," they added.