The dollar rose against the yen Wednesday in Asia after dipping early in the session as the U.S. Federal Reserve's sharp interest rate cut overnight stoked concerns the U.S. economy's outlook may be gloomier than expected.
The U.S. dollar hit a session low 115.72 yen early, also pulled down by sales of the greenback by Japanese exporters, before recovering. By midafternoon, the dollar had bounced back to 115.92 yen, up from 115.74 yen late Tuesday in New York. The euro rose to US$1.3977 from US$1.3961.
After the interest rate cut, the greenback dropped to nearly a record low versus the euro and fell below $1.0100 against the Canadian dollar for the first time nearly 30 years.
"The foreign exchange market appears to recover its composure after the Fed cut interest rates by half a point last night," said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex and Ueda Harlow.
But many investors remain on guard against the fallout from the subprime loan crisis, such as a possible slowdown in the U.S. economy, Ishikawa said. "The dollar could keep falling against other currencies for the time being," he said.
Michiyoshi Kato, a senior trader at Mizuho Corporate Bank, echoed the view, saying the Fed's decision to lower the Fed funds rate by 50 basis points may have spurred concerns over the outlook for the world's largest economy.
"Some players are wondering if the Fed's decision suggests that the U.S. economy will go from bad to worse in the near future," Kato said. "If that is the case, it's very difficult to buy the dollar now."
The Bank of Japan, as widely expected, left interest rates unchanged in its policy board meeting ended Wednesday - a move seen as helping the American currency regain some of its early losses.
Against other regional currencies, the dollar was lower, falling to 1.5078 Singapore dollar from 1.5092 the previous day, and to 45.560 Philippine peso from 46.050. It dropped to 926.4 South Korean won from 930.7.
US President Joe Biden and Iraqi Prime Minister Mustafa Al Qadimi signed an agreement on July 26 to formally end the USA's military presence in the country by the end of the year