Forex

TOKYO (Thomson Financial) - The US dollar remained under pressure in early trade in Asia Tuesday due to growing concerns about the credit crunch and lingering fears of a US recession, but it received some relief from a warning by European Central Bank chief Jean Claude Trichet about excessive volatility in currency markets.

ECB President Jean-Claude Trichet told reporters in Switzerland Monday that the dollar's string of record lows was unsettling.

'Excessive, volatile, and disorderly movements are undesirable for economic growth,' he said after a meeting of central bankers at the Bank for International Settlements.

'In the present circumstances, we are concerned about excessive exchange rate moves,' he said.

At 9.38 am (0038 GMT), the dollar was quoted at 101.58 yen, compared to 101.70-101.80 yen in late New York trading, while the euro was at 1.5344 US dollars compared to 1.5339-1.5349 dollars in late New York.

On Wall Street overnight, Blackstone Group posted a fiscal first quarter loss as the US private equity firm booked a writedown related to the tough credit climate and a big stake in a bond insurer.

Meanwhile, Countrywide Financial Corp was reported to be under investigation by the government for securities fraud and Moody's downgraded a batch of Bear Stearns' securities backed by Alt-A mortgages, or home loans given to people lacking proof of income or with minor credit problems.

'As the financial markets are now assuming chaotic situation posed by the subprime lending problem, unless the US government takes more concrete measures which can eliminate the root cause the dollar is most likely to continue to trend lower,' said Ryohei Muramatsu, head of Group Treasury Asia at Commerzbank in Tokyo.

'Although the market now feels that the injection of public funds is a must to resolve the subprime loan problem, the US government has so far been reluctant to choose such an option,' he said.

Meanwhile, the dollar was also hit by growing expectations that the Fed would delivery another big rate cut when the Federal Open Market Committee (FOMC) meets on March 18 to stave off the risk of a recession following the weak jobs data last week.

The Labor Department reported on Friday the US economy unexpectedly shed 63,000 jobs in February, the most in five years. That followed news on Thursday that home foreclosures rose to a record high in the fourth quarter of 2007.

'The consensus view in the market is now that the Fed will offer a 75 basis point rate cut, while speculation has surfaced that the Fed may make an emergency rate reduction or that it will deliver a 100 basis point rate cut,' Muramatsu said.

The euro was rangebound against the dollar as the market tried to digest the underlying intension of remarks by Trichet.

'Remarks by Trichet may not be able to halt the rising trend of the euro, but may only be capable of slowing the pace of its rise,' Muramatsu said.

Tokyo 9.38 am (0038 GMT)

US dollar

yen 101.58

sfr 1.0182

Euro

usd 1.5344

stg 0.7638

yen 155.84

sfr 1.5621

Sterling

usd 2.0082

yen 203.99

sfr 2.0443

Australian dollar

usd 0.9170

stg 0.4565

yen 93.10