Dollar rebounds in volatile Asian trade

TOKYO, Aug 29, 2007 (AFP) – The dollar rebounded after falling sharply on Wednesday against the yen over renewed concern about credit problems in the United States, dealers said. But they said dollar-selling sentiment remained strong as the recent turmoil in equities may continue.

The financial chaos has led dealers to unwind their risky “carry trades” in which they borrow in Japan, which has ultra-low interest rates, to invest in higher-yielding economies.

The dollar rose to 114.37 yen in Tokyo morning trade from 114.25 in New York late Tuesday.

The euro declined to 1.3596 dollars against 1.3604 but rose to 155.50 yen after 155.44.

“The dollar rebounded in directionless trading as various kinds of speculation appeared and disappeared in the market,” said Hironobu Hagi, deputy general manager at Shinsei Bank’s capital markets division.

“It’s as if players were scared about something flying in the dark,” Hagi said.

“Selling pressure temporarily subdued after players confirmed some buying orders were lined up just below 114 yen, but it’s certain that they’ll try a weaker dollar again at some point,” Hagi said.

The yen remained firmer against hig