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Dollar trades around 107 yen line in Tokyo morning deals+
(Japan Economic Newswire Via Acquire Media NewsEdge) TOKYO, Sept. 5_(Kyodo) _ The U.S. dollar traded around the 107 yen line Friday morning in Tokyo, after falling sharply overnight on growing uncertainty over the U.S. economic outlook due partly to deteriorating U.S. employment conditions.
The euro fell to a 10-and-a-half-month low against the dollar and a 13-month low against the yen after the European Central Bank slashed its eurozone economic growth forecast for 2008 and 2009.
At noon, the dollar fetched 106.95-107.00 yen against 107.05-15 yen in New York and 108.33-36 yen in Tokyo at 5 p.m. Thursday.
The euro traded at $1.4272-4277 and 152.67-72 yen versus $1.4320-4330 and 153.37-47 yen in New York and $1.4536-4539 and 157.50-54 yen in Tokyo late Thursday.
After declines in New York on Thursday, the U.S. currency suffered further losses due to plunges in U.S. stocks, temporarily falling to the 105 yen territory during early Friday trading overseas, dealers said.
The dollar later rose close to the 107 yen line in Tokyo on buying on dips by Japanese importers, they added.
But the dollar's basic tone remained bearish after Japan's key Nikkei stock index plunged more than 300 points during the morning session.
"The plunge in the stock markets dampened investors' appetite for risks and prompted them to unwind leveraged yen carry-trades," said Osamu Takashima, chief analyst of the global markets sales and trading division at the Bank of Tokyo-Mitsubishi UFJ.
In yen-carry trades, investors borrow the low-yielding yen to fund investments in the dollar, the euro and other higher-yielding currencies. In unwinding such trades, investors liquidate those assets and buy back the yen.
The euro weakened amid fears about a possible slowdown in the European economy. The single European currency fell to 151 yen territory at one point, its lowest level against the yen in Tokyo since August last year, and dropped to the $1.4200 level, a level unseen since October.
The euro was battered after the ECB on Thursday downgraded the eurozone growth forecasts and ECB President Jean-Claude Trichet made bearish remarks about the eurozone economy.
Trichet said the economy is stuck in a "trough," while noting a slowing in corporate and household demand in the eurozone.
Copyright ? 2008 Kyodo News International, Inc.
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