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Last Updated: Thursday, 9 October, 2003, 09:25 GMT 10:25 UK
Jittery dollar drops again
Dollar/yen exchange rate
The dollar has once again fallen sharply, as investors convinced themselves that Washington was happy to allow it to weaken.

In Tokyo, the dollar fell below 109 yen for much of Thursday, only recovering slightly after the Bank of Japan reportedly intervened.

The dollar has lost almost 10% of its value against the yen over the last couple of months, mainly thanks to a fresh influx of investment into Japan's apparently resurgent economy.

Japan, heavily reliant on exports, is displeased at the trend, and had hoped to hold the dollar above the 110-yen mark.

But the US, although officially clinging to a strong dollar, is believed to be increasingly inclined to let it slide in order to help mend its widening current-account deficit.

Ups and downs

The White House said on Wednesday that the US still believed in a strong dollar.

But at the same time, Washington has repeatedly complained that some currencies - notably in Asia - are undervalued against the dollar.

Yen traders

Combined with European Central Bank President Wim Duisenberg's comments that the US current-account deficit made a weaker dollar "inevitable", the mood among traders has turned firmly against the dollar.

Signs that the Japanese economy is starting to revive have sent the Tokyo stock market higher, which has drawn heavy flows of international money into the yen.

This has led the Bank of Japan repeatedly to intervene to push the yen back down, so far without much success.

Japanese Vice-Finance Minister Zembei Mizoguchi insisted that the US economy was still strong in relation to Europe and Japan, and so the dollar should correct its recent slide.


MARKET DATA - 11:37 UK

FTSE 100
5428.78up
22.84 0.42%
Dax
5732.06up
18.55 0.32%
Cac 40
3783.91up
14.37 0.38%
Dow Jones
10403.79up
78.53 0.76%
Nasdaq
2273.57up
35.31 1.58%
Data delayed by at least 15 minutes

SEE ALSO:
Why the dollar is king
09 Oct 03  |  Business
Duisenberg sparks dollar slide
06 Oct 03  |  Business
Japan vows to restrain yen
01 Oct 03  |  Business
Bouncing yen batters Nikkei
22 Sep 03  |  Business


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