Business Recorder
Dollar wallows near 6-month low in Asia

Dollar wallows near 6-month low in Asia

TOKYO: The dollar wallowed near six-month lows against a basket of major currencies on Thursday as the US political crisis appeared to deepen, threatening to delay efforts by President Donald Trump to implement his economic stimulus plans.

“Political instability in the United States is shaking markets. You put a brake on investments to the US when you see those headlines,” said Bart Wakabayashi, Tokyo Branch Manager of State Street Bank.

The Justice Department appointed a former FBI director as special counsel to investigate possible collusion between President Donald Trump’s 2016 campaign team and Russia.

The appointment of a special counsel follows Trump’s dismissal of James Comey, his FBI director who was investigating Russia’s role in the US election.

Media then reported that Trump may have interfered with a federal investigation, a serious allegation that could even lead to his impeachment if verified.

“Some politicians might try to begin the impeachment process, and if they do, that would take much time to carry it out, and while it is ongoing, it would be almost impossible to push fiscal stimulus through,” said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo, noting that it took almost two years for the Bill Clinton impeachment process to proceed though Congress.

The dollar index, which tracks the greenback against six major rivals, fell as low as 97.333 on Wednesday, its lowest level since Nov. 9, having given up all the gains it had made following the US presidential election in November.

It last stood at 97.588, flat from late US trade, and down more than 2 percent over the past four sessions.

The dollar index has now fallen more than 5 percent from its 14-year high of 103.82 set on Jan 3, despite expectations of higher US interest rates that should bolster the US currency.

The Federal Reserve raised rates in March and its officials have said there could be two or three more rate hikes this year.

Against that backdrop, the dollar dropped 2.09 percent against the yen on Wednesday, its biggest fall since July 29 last year.

It fell to a three-week low of 110.53 yen early on Thursday before bouncing back slightly to 111.25 yen, up 0.5 percent from late US levels on bargain-hunting by Japanese investors.

The yen gave a limited response to data showing Japan’s GDP grew an annualised 2.2 percent in the first quarter, handily beating economists’ forecast of 1.7 percent rise.

The euro hit a six-month high of $1.1174 and last stood at $1.1143, down 0.1 percent on the day.

The Swiss franc hit a six-month high of 0.9772 to the dollar on Wednesday before easing back to 0.9805.

Against the euro, to which the Swiss currency is closely tied, the franc firmed to 1.0923 franc per euro from last week’s eight-month low of 1.0988.—Reuters

Dollar extends losses against yen, Swiss franc in EuropeMost Asian currencies fall

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