Dollar static in Asia after turbulence

TOKYO (AFP) - The dollar hardly moved against the yen in Asian trade on Wednesday as market players took a breather after recent turbulence over the troubled US housing sector, traders said.

The dollar changed hands at 114.40 yen in late morning trade in Tokyo, unchanged from New York late Tuesday.

The euro was trading at 1.3458 dollars here, slightly down from 1.3463 in New York. The euro rose to as high as 1.3521 dollars in European trading on speculation the US Federal Reserve would soon cut its key interest rate.

The single European unit was quoted at 153.91 yen in Tokyo, down from 154.10 in New York.
The market is "relatively calm today as overnight trading was quiet, except for some volatility in London," said Kenichi Yumoto, vice president at the foreign exchange sales and trading department of Societe Generale in Tokyo.

"It is too early to declare that the market has stabilised but the turmoil is passing for now," he said.
"Market players have been exhausted in the recent volatile trade and there isn't much room left for them to take risks anew. There is a risk aversion among them," he said.

Yumoto said Asian countries were less exposed to credit problems arising from the troubled US subprime mortgage sector.
He noted that the Shanghai share market soared to a new record Tuesday even though China raised interest rates. China's central bank made the move in a bid to tame decade-high inflation.

The Bank of Japan (BoJ) starts a two-day policy board meeting Wednesday but the market consensus is that the central bank will keep rates on hold to ward off confusion in a market hit by credit woes, Yumoto said.

A quarter-point hike would not significantly impact the Japanese economy itself due to the small margin, Yumoto said. Japan's benchmark borrowing rate is 0.50 percent, by far the lowest of any major economy.

"But it wouldn't be allowed for Japan to go alone out of sync with other central banks. It would be a big problem if Japan raised rates and triggered a crisis emanating from Tokyo," he said.

Last Friday, the US Federal Reserve unexpectedly slashed its discount rate for commercial banks a half point to 5.75 percent, further fueling talk of a fed funds rate cut.

The Fed's move put a temporary halt to the rapid unwinding of the yen carry trade, a risky strategy where investors borrow in low-yielding currencies such as the yen to invest in higher-yielding assets elsewhere.