By Satomi Noguchi
TOKYO, Feb 20 (Reuters) - The yen trimmed losses against the
dollar and edged up against higher-yielding currencies on
Wednesday, getting a boost from a renewed slide in stocks on
worries about the credit market troubles hurting financial firms.
Asian equities fell and the Nikkei share average <> lost
3.3 percent, with traders citing a report that KKR Financial
Holdings <KFN.N> has delayed repayment of billion of dollars of
commercial paper for a second time.
The Financial Times reported that KKR Financial, the listed
affiliate of private equity group Kohlberg Kravis Roberts & Co
[], has begun a new round of talks with creditors and
deferred repayment of debt due last Friday. []
But the yen's gains were limited, and traders said the
currency market was increasingly becoming immune to such bad news
tied to the credit crunch that has dragged on for six months.
""The market has already sold the dollar a lot on worries
over the credit market turmoil and sharp downturn in the U.S.
economy," said a senior trader at Japanese bank.
The trader said a bigger negative surprise was necessary for
the dollar to break out of the range roughly between 106 yen and
109 yen it has shuffled within since late January.
The yen typically jumps when tumbling stocks spook investors
and prompt them to unwind carry trades -- borrowing funds in the
low-yielding Japanese currency to buy higher-yielding currencies
or assets.
The dollar was at 107.80 yen, little changed from late U.S.
trade the previous day and down from a day's high of 108.18 yen.
The euro edged down 0.1 percent to 158.57 yen <EURJPY=R>
after rising as high as 159.28 yen earlier in the session. The
single currency inched down 0.1 percent to $1.4714 <EUR=>.
The wave of risk reduction pushed the high-yielding
Australian and New Zealand dollars lower.
The New Zealand dollar slipped 0.4 percent to 85.53 yen
<NZDJPY=R>, while the kiwi shed 0.4 percent to $0.7936 <NZD=D4>
after having reached a seven-month high on Tuesday.
The Australian dollar pulled back from a three-month high
against the dollar hit the previous day, partly on profit-taking
after fourth-quarter wage data matched expectations.
The data did little to change the market's view that the
Reserve Bank of Australia will likely raise interest rates next
month from the current 11-year high of 7 percent.
The Aussie dropped 0.5 percent against both the dollar and
the yen to $0.9136 <AUD=D4> and 98.42 yen <AUDJPY=R>
respectively.
Analysts said the spike in crude oil prices was having a
limited impact on major currencies.
U.S. crude <CLc1> slipped to $99.28 a barrel, off a record
peak of $100.10 hit the previous day on worries about supply
disruptions in Nigeria and expectations that OPEC may keep output
tight.
Tomoko Fujii, head of economics and strategy for Japan at
Bank of America, said she was sceptical of whether higher oil
prices would have a significant impact on major currencies
because the rise was due to such one-off factors.
Some analysts have said the threat of oil stoking higher
inflation could complicate the Federal Reserve's interest
rate-cutting campaign. The Fed is expected to slash rates by
another half-point from the current 3.0 percent next month.
To better gauge the U.S. economy, market participants awaited
readings of consumer prices and housing starts due at 1330 GMT.
Housing starts are expected to edge up in January after falling
to a 14-year low in 2007.
Investors will also scrutinise minutes from the Fed's January
meetings to be released later in the day to glean a better idea
of the central bank's outlook on rates after it chopped the
federal funds rate by a total of 125 basis points last month.
(Additional reporting by Naomi Tajitsu; Editing by Eric
Burroughs)
