November 20, 2009
TOKYO (AFP) - The euro continued its slide in Asian trade on Friday as investors shunned assets viewed as risky following falls on world stock markets triggered by fresh worries about the economic outlook.
The euro fell to 1.4902 dollars in Tokyo morning trade from 1.4922 in New York late Thursday, and to 132.60 yen from 132.78. The dollar softened to 88.94 yen from 88.99.
"Over the past few days, patches of weakness in economic data have seen fears over the strength and durability of the economic recovery return," said NAB Capital strategist John Kyriakopoulos.
"As a result, 'commodity currencies' like the Australian dollar were shunned in favour of 'safe-haven' currencies like the US dollar and the yen," he added.
The Organisation for Economic Cooperation and Development (OECD) said Thursday the pace of recovery in the global economy would be "modest," and forecast interest rates in the United States and Europe to remain "close to zero" until late 2010.
The Bank of Japan (BoJ) was due to wrap up a monetary policy meeting Friday, with markets anticipating its key lending rate would be kept at 0.1 percent to fight stubborn deflation.
"Given that official concerns about deflation are intensifying, interest rates are unlikely to go up for a long while," said Calyon analyst Mitul Kotecha.
"We only look for the first rate hike to take place in the second quarter of 2011."
At its previous meeting last month, the BoJ announced it would halt some of its emergency measures to tackle the financial crisis at the end of the year.
But it is under pressure from the government not to tighten its highly stimulative monetary policy too soon.
Japanese Finance Minister Hirohisa Fujii expressed concern Friday about deflation, describing it as "worrisome."
The government has limited scope for further pump-priming measures given Japan's soaring public debt.
In its economic outlook report, the OECD urged Japan to turn off the stimulus spending taps and work on repairing the public coffers now that its worst post-war recession is over.
-- Dow Jones Newswires contributed to this story --
