Dollar dips against yen in Asia trading

The greenback slid to as low as 89.18 yen, before recovering somewhat to 89.97 yen in Tokyo late afternoon trade, down from 90.08 in New York on Friday.

The euro edged up to 1.4760 dollars against 1.4715, recovering some of its heavy losses seen at the end of last week. The European currency firmed to 132.78 yen from 132.62.

In Asian trade, the dollar firmed to 1,186.75 South Korean won from 1,182.20 Friday, to 1.4009 Singapore dollars from 1.3957 and to 9,545.00 Indonesian rupiah from 9,515.00. The greenback also firmed to 32.67 Taiwan dollars from 32.48 and to 33.45 Thai baht from 33.41. But it skidded to 47.45 Philippine pesos from 47.74.

Investors bought the yen after U.S. lender CIT Group filed for bankruptcy protection on Sunday, reigniting jitters about the woes of the U.S. financial sector.

The dollar recovered some of its early losses due to fears it had fallen too rapidly, “but it will likely remain under pressure,” said Hideaki Inoue, chief forex manager at Mitsubishi UFJ Trust and Banking Corp.

Barclays Capital analysts said CIT Group's troubles had triggered fears among currency traders that the lender could suffer a similar fate to Wall Street giant Lehman Brothers, whose collapse last year rocked world markets. But they said the CIT bankruptcy, while significant, was unlikely to have a lasting impact on the foreign exchange markets.

Investor risk appetite was also reduced by a sharp drop in stocks on Wall Street on Friday that sent Asian markets lower on Monday.

Markets were also nervous ahead of monetary policy decisions due this week in the United States, the eurozone, Britain and Australia, as well as key U.S. jobs data on Friday.

“I think the market will react sensitively (to developments) this week,” Inoue said. “But investors expect no major changes or an exit strategy from the stimulus policy to be announced by the Fed,” he said.

The U.S. Federal Reserve (Fed) is widely expected to hold its key lending rate steady with a range of zero to 0.25 percent until early 2010.

Australia's central bank, however, is tipped to announce on Tuesday that it is raising its benchmark interest rate for the second time in less than a month to prevent the domestic economy overheating.

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