Dollar stays weak against yen

Agence France Presse

Posted at Aug 31 2010 10:57 AM | Updated as of Aug 31 2010 06:58 PM

TOKYO - The dollar stayed weak against the yen in Asia on Tuesday despite Japanese authorities' efforts to stem the domestic unit's rise and safeguard an export-driven recovery, dealers said.

But the euro slipped to an all-time low of 1.2931 Swiss francs on weak stock markets, as investors bailed out of riskier assets. The euro later recovered to 1.2940.

The dollar fetched 84.51 yen in Tokyo morning trade, hardly changed from late Monday in New York where weak consumer spending data heightened concern about the recovery of the world's largest economy.

The euro fell to $1.2646 from $1.2663  in New York and to 106.90 yen from 107.14.

Ahead of the Bank of Japan's Monday announcement of a new monetary-easing measure, the dollar was near the 86 yen level.

The central bank announced an extension to a multi-billion-dollar loan programme Monday in response to strong pressure from government officials to curb the yen's rise and support an economy mired in deflation.

The unit hit a 15-year high against the dollar last week, threatening exports which have been the driving force of the Japanese economy.

The government for its part unveiled a 920 billion yen ($11 billion) stimulus, including steps to boost employment for graduates, investment in green industries and support for smaller businesses.

"Some market players say the measures announced yesterday had only a limited impact but I believe it was better than no action," said Toshihiko Sakai, senior dealer at Mitsubishi UFJ Trust and Banking.

"It was like the BoJ letting off the first arrow and the government the second, before the third arrow -- intervention -- is shot off," Sakai said, while adding it was unlikely that monetary authorities will step in markets in the near future.

"Japan would have to act alone if intervening and it would not come until Japan confirms US authorities would not oppose it and sees speculative yen-long, dollar-short positions build up further," he said.

Khoon Goh, senior economist at ANZ bank in Wellington, said "the difficulty for the Japanese policymakers is that any intervention has to be coordinated with other central banks for it to be effective".

"Going at it alone can be futile," the economist told Dow Jones Newswires.