Dollar lower in cautious trading despite South Korean troubles
NEW YORK (AP) _ The dollar fell against the Japanese yen and German mark Tuesday as caution about possible Christmas intervention by Japan’s central bank overrode concerns about South Korea’s fragile economy.
South Korea’s stock market suffered its worst drop ever after a second major Wall Street rating agency lowered the country’s credit rating and the president-elect warned that the nation may not be able to pay its bills. The dollar also hit another record high vs. the South Korean won.
But the U.S. currency dropped against the yen after the harrowing developments in South Korea, despite its position as one of Asia’s most important economies and a crucial Japanese trading partner.
Currency dealers sold dollars to avoid holding any risky positions with U.S. trading rooms sparsely staffed through the rest of the week. Some expect the Bank of Japan to take advantage of thin markets over Christmas by selling dollars for yen. The bank intervened in the market three times last week.
``You’ve got to square up those positions going into the holiday,″ said Patty Lifson, an assistant vice president of foreign exchange at Manufacturers & Traders Trust Co. ``If the Bank of Japan should decide to intervene, it will have a big effect on the market.″
In late New York trading, the dollar was quoted at 129.22 yen, down from 130.13 late Monday. The U.S. currency also was changing hands at 1.7755 marks, down from 1.7810.
The dollar’s drop also came after a small Tokyo brokerage, Maruso Securities Co., reportedly became the fifth Japanese financial company to fail this year under the weight of heavy debt.
Despite the signs that Asia’s financial turmoil is not about to wane, traders are satisfied with the dollar’s current levels against the yen and the mark and want to maintain them through the year’s end, Lifson said.
The dollar has gained 16 percent from its 1997 low of 111.20 yen on June 11, while rising 15 percent from its year low of 1.5410 marks on Jan. 2.
Other late dollar rates in New York, compared with late Monday: 1.4352 Swiss francs, down from 1.4398; 5.9415 French francs, down from 5.9570; 1,743 Italian lire, down from 1,745.75; and 1.4372 Canadian dollars, up from 1.4325.
The British pound was quoted at $1.6656, up from $1.6633.