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TOKYO: The dollar hit a fresh four-month low versus the yen in Asia trade Tuesday after a speech by US President Barack Obama illustrated a lack of progress in efforts to end a debt standoff.
The dollar fell to 77.89 yen, its lowest level since March 17, after US President Barack Obama addressed the nation in a prime time TV speech in which he warned that the current debt impasse could have grave consequences.
Failure to compromise, he said, “would risk sparking a deep economic crisis - one caused almost entirely by Washington.” The euro rose to dollar 1.4489 by 0550 GMT in Tokyo from dollar 1.4382 in New York Monday.
The speech fell “short of market expectations that the President might show progress on the ongoing standoff,” Hideki Hayashi, global economist at Mizuho Securities, told Dow Jones Newswires.
The greenback later saw volatile trade, at one point surging to 78.70 yen before falling back to 78.08 in the afternoon.
The euro was at 113.08 yen from 112.37 in New York.
Dealers said the movement was due to large yen selling orders being triggered as opposed to any Japanese market intervention.
The dollar “has been weighed by uncertainty over the US debt ceiling talks and concern over a possible credit downgrading,” said Gen Kawabe, dealer at Chuo Mitsui Trust and Banking.
Congressional Democrats and Republicans have made no substantial progress towards a unified plan to cut the deficit and raise the debt ceiling by an August 2 deadline.
While markets in general expect officials to resolve their differences in time, the continued impasse has raised uncertainty over whether the US can keep its triple-A credit rating.
President Obama warned that the Republicans' unyielding approach to the US debt crisis was a “dangerous game” and urged Americans to press for compromise.
With a potential US default looming, Obama appealed to Americans to “make your voice heard”.
The yen moved towards levels not seen since it reached a postwar dollar high following the March 11 earthquake and tsunami, which prompted Japan and its G7 partners to launch a coordinated intervention.
Japanese exporters have called for government efforts to halt the yen's advance, but Japanese Finance Minister Yoshihiko Noda on Tuesday stopped short of hinting at an imminent currency market intervention.
“The (yen's) movement has been one-sided largely because of overseas factors. I will continue to closely watch developments in the market today,” Noda said.
The dollar was lower against other Asian currencies, with the Malaysian ringgit hitting near 14-year highs against. It was trading at 2.9416 to the dollar at 0550 GMT.
The New Zealand dollar was trading higher late Tuesday after hitting a new post-float high on broad-based weakness in the greenback.
Following Obama's speech the “kiwi” reached a new high of dollar $0.8705.
The greenback weakened to Sg dollar 1.2044 from Sg dollar 1.2081 on Monday, to 1,051.50 South Korean won from 1,055.00 and to Tw dollar 28.79 from Tw dollar 28.84.
The unit also retreated to 8,514.75 Indonesian rupiah from 8,526.75, to 42.36 Philippine pesos from 42.46 and to 29.68 Thai baht from 29.80.
