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FOREX-Dollar holds firm vs yen after Japan data, BOJ

Published 12/22/2008, 08:32 PM
Updated 12/22/2008, 08:35 PM
TM
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* Dollar holds gains vs yen after Japan data, BOJ Shirakawa

* Asian stocks track Wall St lower

* NZ dlr steady after data shows economy in deeper recession

By Satomi Noguchi

TOKYO, Dec 23 (Reuters) - The dollar held firm against the yen on Tuesday on deepening concerns over the Japanese economy following more gloomy data and a deteriorating economic outlook expressed by the Bank of Japan.

Asian shares fell after Wall Street slid on more evidence the year-long recession will keep eating into corporate profits, but activity in the currency market remained subdued amid a public holiday in Japan.

"Trading is absolutely quiet with limited players in the market ahead of the Christmas holiday later this week," said a trader at a Japanese bank in Singapore.

The dollar was little changed from late New York trade on Monday at 90.20 yen.

The U.S. currency recovered from a 13-year low of 87.13 yen struck last week after BOJ Governor Masaaki Shirakawa said on Monday yen strength and a global slowdown may reduce Japanese exports further even after a record plunge in November.

Japan logged a trade deficit for the longest period in nearly 30 years in November as a global economic slump and a surging yen led to a record fall in exports, tearing into earnings at big companies such as Toyota Motor Corp..

Shirakawa added that Japan's economic conditions are likely to become more severe even after the BOJ cut interest rates close to zero last week.

South Korean shares dropped 1.0 percent in early trade with regional trading thinned ahead of the year end holiday season.

China's unexpectedly light touch in its fifth cut in interest rates on Monday was taken as more of a reminder of how bad the economy was rather than fuelling optimism.

The euro edged up 0.2 percent to $1.3967, but rangebound after a plunge late last week from a three-month high of $1.4720 hit on Thursday.

Against the yen, the euro rose 0.2 percent to 125.93 yen.

The New Zealand dollar was steady at $0.5735, little moved by data showing the New Zealand economy slipped deeper into recession in the third quarter, reinforcing expectations for further sharp cuts in interest rates in the country. (Editing by Kazunori Takada)

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