Dollar Declining in Asian Trading (AP) (19-02-2008)

TOKYO (AP) -- Unconfirmed talk of the possibility of China’s central bank raising interest rates has sent the dollar sharply down against the yen in Asia Tuesday.

The dollar fell to 107.75 yen from as high as 108.20 yen earlier in the day.

In a swift response the People's Bank of China denied the rumor without commenting on it. A Chinese rate hike usually boosts the value of other Asian currencies, including the Japanese yen.

Some traders believe that the Wall Street Journal article talking for considerably bigger than expected write-down's for Lehman Brothers is also putting pressure on the dollar.

They added, however, that the market is now awaiting U.S. economic data such as housing starts and consumer price index data for January set for release later in the week to get a better sense of direction for the dollar.

Keiichi Iguchi, a dealer at Resona Bank, said that if the U.S. data are positive, the dollar could rise to above 109 yen.

"It's still necessary to watch how a U.S. economic slowdown affects the European economy and how the European Central Bank will react," he said.

The dollar was also mostly lower against regional currencies, falling to 943.8 South Korean won from 945.4 the previous day, and to 9,145 Indonesian rupiah from 9,161.

Source: AP