Dollar falls against yen after Bernanke's remarks

by Noor Bangash Wed Sep 14, 2011 4:42 pm

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TOKYO: The dollar fell to a one-month low against the yen in Asia on Wednesday after a gloomy assessment of the US economy from Federal Reserve chairman Ben Bernanke, dealers said.

After hitting a fresh one-month low of 79.84 yen, the dollar fetched 79.90 yen in Tokyo morning trade, down from 80.05 yen in New York late Tuesday.

Bernanke warned Tuesday there had been a "loss of momentum" in the US jobs market and the moribund housing market was "a big reason that the current recovery is less vigorous than we (the Fed) would like."

He also said "accommodative monetary policies are still needed," while he gave no hints that the Fed was ready to extend a $600 billion monetary stimulus package that is due to end this month.

His comments sent Wall Street stocks lower and helped drag down the US currency overnight, dealers said.

"US stocks dropped as Bernanke suggested the economy in the short term is weaker than expected while he gave no comment on a possible third round of quantitative easing," said Gen Kawabe, dealer at Chuo Mitsui Trust and Banking.

"But the market is not tilted to one-sided dollar selling as a weak stock market is positive for the greenback," Kawabe said.

Meanwhile, the euro sagged to $1.4658 from $1.4688 and to 117.14 yen from 117.60 yen.

The euro pared some of its overnight gains after being boosted by positive economic data from the eurozone.

Germany's industrial orders in April rose 2.8 percent in March, topping the 1.9 percent expected by analysts.

The euro has also been supported in recent days by rising confidence in Europe's ability to manage Greece's debt woes and expectations for interest rate hikes in the future.

The European Central Bank is to hold a policy-setting meeting Thursday and ECB president Jean-Claude Trichet is due to speak afterwards.

"The market is widely expecting Trichet would hint at an ECB rate hike in July," said Gen Kawabe, dealer at Chuo Mitsui Trust and Banking. (AFP)