Dollar edges up ahead of Fed policy meeting

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TOKYO: The dollar edged up in Asian trade Monday as dealers await the outcome of a crucial US Federal Reserve policy meeting, looking for clues to the future of its monetary easing programme.  The greenback bought 94.74 yen in Tokyo afternoon trade, up from 94.22 yen late Friday in New York, where it lost ground on mostly disappointing US economic data. The euro slipped to $1.3320 from $1.3346 while it was up at 126.21 yen from 125.74 yen.

The Federal Reserve Open Market Committee will conclude its two-day meeting on Wednesday, with analysts saying US growth remains too tepid for it to start unwinding its $85 billion-a-month asset-buying programme.

A senior dealer at a major bank in Tokyo said: “What’s important for currency dealers is not what the outcome of the meeting will be, but how other markets react to it.”

Another investor said dollar-yen trade was unlikely to find a firm direction until after the meeting, as markets speculate about previous comments from Fed chairman Ben Bernanke over tapering off the scheme, which was launched in September to kickstart growth.

“Letting air out of a bubble is never easy and…Bernanke’s somewhat clumsy attempt to do this has produced extreme volatility across asset classes,” National Australia Bank said.

Bernanke’s post-meeting press briefing Wednesday may clarify what “tapering” off the bond-purchase programme actually involves, it added.

“Both the euro and pound have performed well through the recent asset market volatility, with a welcome absence of bad news keeping them out of the firing line,” the bank said.

The dollar was mixed against other Asia-Pacific currencies Monday.

It firmed to Sg$1.2548 from Sg$1.2523 on Friday, to 1,128.20 South Korean won from 1,125.25 won, to 42.93 Philippine pesos from 42.86 pesos, and to 30.71 Thai baht from 30.57 baht.

It slipped to 9,900 Indonesian rupiah from 9,947 rupiah and to 57.77 Indian rupees from 57.84 rupees. The dollar was flat at Tw$29.86

The Australian dollar rose to 96.16, while US cents from 95.83 cents while the Chinese yuan fetched 15.43 yen from 15.48 yen.