US dollar holds steady

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IOL world currency1 Graphic: Renjith Krishnan.

Tokyo - The dollar held steady Monday following a surge last week on comments from Fed Chief Janet Yellen as Tokyo shares rebounded after hitting a six-week low.

In midday trading, the greenback fetched 102.46 yen, rising from 102.23 yen in New York Friday.

The euro was mixed, buying $1.3801 and 141.39 yen, compared with $1.3794 and 141.87 yen in US trade.

Tokyo's Nikkei 225 stock index, which added 1.83 percent by the break, was lifted by the yen's weakening against the dollar, boosting exporters' profitability.

Last week the greenback rose after Yellen said the central bank may raise its ultra-low federal funds rate around six months after winding up its asset-purchase stimulus, expected by the end of the year.

But analysts said the dollar's rise was being capped by fears over the Crimean crisis.

“After having risen on the (Federal Open Market Committee) decision... the dollar/yen has become top-heavy due to the situation in Ukraine,” Daiwa Securities said.

The crisis in Europe - which has rattled global financial markets - is set to dominate a nuclear security summit opening in The Hague on Monday.

Russia is facing possible exclusion from the G8 club of rich nations as punishment for its absorption of Crimea following the ouster of Ukraine's pro-Moscow leader last month.

Analysts said the simmering tensions could see traders move back into the yen, which is viewed as a safe-haven unit in times of turmoil or uncertainty.

Forex traders were also watching Chinese data as fresh figures said manufacturing activity contracted in March to its weakest rate in eight months.

HSBC's preliminary purchasing managers index (PMI), which tracks manufacturing activity in China's factories and workshops, fell to 48.1 from a final reading of 48.5 in February, the British bank said in a statement.

A reading above 50 indicates growth, while anything below signals contraction.

But investors took the latest Chinese figures in their stride.

“The whole of Asia seems to have factored in lowered expectations for China's growth,” said Yoshihiro Okumura, general manager at Chibagin Asset Management. (Dow Jones Newswires contributed to this report) - Sapa-AFP

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