Tuesday 23 Apr 2024
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TOKYO (Sept 11): The dollar was steady in Asia Thursday after hitting a six-year high against the yen, while the pound recovered on Bank of England rate hike hints and easing concerns about Scotland's independence vote.

In midday Tokyo trading, the dollar bought 106.74 yen, slightly down from 106.85 yen in New York, its highest levels since the global financial crisis in 2008.

The euro dipped to $1.2914 and 137.85 yen from $1.2916 and 138.02 yen in New York.

Dealers said the dollar could soon test the 107-yen level on the back of higher US Treasury yields and as the US Federal Reserve winds down its stimulus.

As speculation builds that the Fed will raise rates sooner than later, the divergence between the monetary policies of the US and those of Japan and Europe -- both of which are expected to ease further -- have been lifting the dollar against the euro and yen.

"There's no doubt that the dollar-yen rate will test 107," said Atsushi Hirano, head of forex sales Japan at Royal Bank of Scotland.

But Kengo Suzuki, chief forex strategist at Mizuho Securities, warned its rapid ascent was "one-sided and overheated", telling Dow Jones Newsires: "We can expect an adjustment waiting to happen."

"I get an impression the market is trying to test how far (the dollar-yen rate) can reach."

Traders will be keeping a close eye on developments tied to a meeting Thursday between Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda.

In other trading, the pound ticked up to $1.6204, well up from a 10-month low of $1.6078 earlier this week.

The unit sank in response to an opinion poll on the upcoming Scottish independence referendum showing for the first time a majority of people in favour of leaving the United Kingdom.

However, a new survey showed that opposition to the independence campaign had restored its lead, soothing concerns about the economic impact of Britain fragmenting.

Adding upside support were comments from Bank of England chief Mark Carney suggesting it could lift interest rates soon as soon as early 2015, citing the country's solid economic recovery.

"You can expect interest rates to begin to increase," Carney said, adding that the bank's forecasts show that hiking rates by the spring of 2015 would allow it to meet its jobs growth and inflation targets.

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