TOKYO–The dollar rose in Asia Thursday as U.S. President Barack Obama formally nominated fiscal dove Janet Yellen to head the Federal Reserve, while he moved to hold talks with lawmakers in a bid to end a budget stand-off. In afternoon Tokyo trade, the greenback bought 97.73 yen, up from 97.37 yen in New York Wednesday, while the euro fetched US$1.3497 compared with US$1.3523, and 131.90 yen against 131.74 yen. “Contrary to our expectations the U.S. dollar has actually edged higher over recent days, shaking off some the pressure associated with the budget impasse in the U.S.,” Credit Agricole said.
It added that the unit was “in a bottoming out process at present, with short term pain likely to give way to medium term gain.” Dealers welcomed Obama’s choice of Yellen to take over from Ben Bernanke at the Fed as she is a supporter of the bank’s US$85 billion-a-month bond-buying scheme, fuelling hopes it will be kept in place. A continuation of the loose monetary policy would be expected to weigh on the dollar, but dealers viewed the news as a positive, boosting riskier assets. Minutes from the Fed’s most recent meeting showed a split among policymakers about when to start winding down the program. But the budget stand-off on Capitol Hill and concerns about how it will affect a recovery in the world’s biggest economy could see a “prolonged” delay in tapering, National Australia Bank said. Yellen’s nomination restored a hint of normality to Washington, where a government shutdown approaches its 10th day with no sign of compromise — raising fears of a catastrophic U.S. debt default as an Oct. 17 deadline looms. The euro was mixed as traders wait for French and Italian industrial output later in the day while the European Central Bank publishes its monthly bulletin, which is expected to show it is still willing to launch further easing measures if necessary. The dollar firmed against other Asia-Pacific currencies. It rose to 43.23 Philippine pesos from 43.16 pesos the previous day, to 62.24 Indian rupees from 62.19 rupees, and to 11,525 Indonesian rupiah from 11,510 rupiah. It also advanced to SG$1.2537 from SG$1.2512, to 31.48 Thai baht from 31.43 baht and to 1,076.04 South Korean won from 1,074.35 won. The Australian dollar weakened to 94.01 U.S. cents from 94.21 U.S. cents, while the Chinese yuan changed hands at 15.97 yen against 15.92 yen.