Australian dollar hit by election uncertainty

TOKYO - The Australian dollar recovered after falling sharply in early Asian trade Monday amid uncertainty about the outcome of this weekend’s election.

By (AFP)

Published: Mon 23 Aug 2010, 12:02 PM

Last updated: Mon 6 Apr 2015, 1:55 PM

The unit dropped to 0.8842 US dollars from 0.8940 late Friday on the prospect of Australia’s first hung parliament in 70 years, before recovering to 0.8916 in afternoon trade.

Bank of New Zealand currency strategist Mike Jones said the political situation had dealt the currency a “heavy blow”.

The greenback turned softer against the yen in Asia due to uncertainty over Tokyo’s efforts to prop up the sagging Japanese economy.

Investors speculated that the Japanese government may not take any new stimulus action for the time being, despite earlier media reports suggesting Tokyo was studying various plans.

The dollar stood at 85.32 yen during Tokyo afternoon trade, falling from 85.63 in New York Friday.

The euro bought 1.2719 dollars compared to 1.2714, and 108.57 yen compared to 108.85 in New York Friday.

Prime Minister Naoto Kan and Bank of Japan governor Masaaki Shirakawa spoke by phone and discussed recent market moves, but did not touch on the issue of foreign exchange intervention, said chief cabinet secretary Yoshito Sengoku.

The pair “exchanged views on the economic and financial situation including foreign exchange moves,” Sengoku told reporters.

Government officials have tried to talk the yen down from current highs after the safe-haven unit strengthened beyond levels assumed earlier by many exporters, who are anxious about its rise.

For every one-yen rise in the currency’s value against the dollar, companies can lose tens of billions of yen earned overseas when repatriated, threatening a sector that Japan depends on to offset its weak domestic picture.

The greenback was mixed against most other Asian currencies.

It weakened to 1,181.30 South Korean won from 1,182.79 Friday and to 31.33 Thai baht from 31.53.

However the dollar firmed to 45.02 Philippine pesos from 44.97, to 1.3549 Singapore dollars from 1.3542 and to 8,970.00 Indonesian rupiah from 8,967.50.

It was flat at 31.93 Taiwan dollars.

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