Dollar weakens in Asia on US budget fears

Tokyo – The dollar faced further selling pressure in Asia Wednesday as investors fret about an impasse over the US budget that could lead to a shutdown of parts of the economy.

 

The greenback fetched ¥98.63 in Tokyo midday trade, from ¥98.74 late in New York and well down from the levels above ¥99 seen Monday.

 

The euro also slipped to ¥132.86 from ¥133.00 while it was nearly flat on the dollar at $1.3470 from $1.3469.

 

US lawmakers are approaching a Monday night deadline to find a deal on a new budget. If no agreement is reached some government agencies could be forced to shut down, which could deal a major blow to the US economic recovery.

 

"Fiscal D-day is looming, spooking investors," National Australia Bank said.

 

Traders began moving out of the greenback last week after the US Federal Reserve surprised markets by keeping its $85 billion-a-month bond-buying stimulus program intact.

 

"Players who had expected the dollar's upturn on a change in the US monetary policy are now forced to review their strategies," a senior trader at a Japanese bank told Dow Jones Newswires.

 

Japanese exporters are also selling dollars and euros as they look to lock in profits before the end of the month, dealers said.

 

The euro found a measure of support from a modest gain in the closely watched IFO German business confidence index for September, which represented the fifth consecutive monthly rise.

 

However, the single currency is down from multi-month highs of Monday after European Central Bank chief Mario Draghi voiced concern about liquidity in the eurozone banking system. – Agence France-Presse