Nov 18, 2004
AAP Breaking
TOKYO (AP) -- The U.S. dollar tumbled to its lowest rate in years against key Asian currencies Thursday after a top U.S. official indicated the government wouldn't intervene to halt the American currency's recent slide worldwide.
The dollar fell to a four-and-a-half-year low against the Japanese yen, and a seven-year low against the South Korean won. The trend continued as European markets opened, and the dollar fell to a new record low against the euro.
The euro surged to US$1.3074, breaking the record set on Wednesday, as concerns about high oil prices and the U.S. trade and budget deficits continued to push the dollar lower.
Analysts attributed Thursday's plunge to comments by U.S. Treasury Secretary John Snow in London on Wednesday, that "no one has ever devalued their way to prosperity" but the "only way to get prosperity is to follow the marketplace."
Snow said the United States favors a strong dollar, but his comments were still interpreted as ruling out official intervention in currency markets and renewed the markets' view that U.S. President George W. Bush's administration is happy to watch the dollar fall.
Some Asian officials have been worried the United States will start relying on a weak dollar to fight the ballooning American trade and budget deficits.
In Tokyo, the dollar fell late Thursday to 103.76 yen, its lowest level since April 2000, down 1.30 yen from late Wednesday.
On Thursday, several Japanese financial officials expressed concern about the dollar's moves, and the top government spokesman said Japan was ready to intervene as it has done in the past to prop up the dollar.
But traders now believe Japan probably won't intervene until the dollar falls below 103 yen.
"I'm concerned about foreign exchange levels and they need to be watched very closely," Japanese Finance Minister Sadakazu Tanigaki said.
Against the South Korean won, the dollar finished at 1,065.4 won, a seven-year low. It closed Wednesday's at 1,081.4 won.
Last week, the Bank of Korea said the won's gains were excessive and called for action, following a US$4 billion dollar-buying spree by the bank.
"We are thoroughly monitoring to prevent speculative engagement in our currency market," said South Korea's Minister of Finance and Economy, Lee Hun-Jai.
In Thailand, the dollar was trading at a six-and-a-half month low of 40.06 baht late Thursday, down from 40.21 baht at Wednesday's close, prompting officials there to eye intervention.
"It's our job to make sure that the baht doesn't swing so much that it affects trade. It's our duty to make sure that it's stable," Bank of Thailand Gov. Pridiyathorn Devakula said.
Pridiyathorn said interest rates rises would be kept in check so that demand in the property sector won't be affected, and the bank would also monitor short-term capital flows.
He didn't say when or whether the central bank might intervene, but foreign exchange dealers expect it to step in if the dollar dips below the psychological level of 40.00 baht.
© 2004 The Associated Press.
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