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FOREX-Dollar index steady near 4-week high; yen inches up
August 30, 2013 / 5:31 AM / in 4 years

FOREX-Dollar index steady near 4-week high; yen inches up

* Dollar index hovers near Thursday’s 4-week high

* Yen supported by Japan exporter flows, soft Nikkei

* But yen’s gains limited as recent risk-off moves ebb

* Syria uncertainty persists, but less of a worry for now

By Masayuki Kitano

SINGAPORE, Aug 30 (Reuters) - The dollar held steady near a four-week high versus a basket of currencies on Friday after having rallied on upbeat U.S. economic data, while the yen was supported by month-end flows from Japanese exporters.

The dollar eased 0.1 percent versus the yen to 98.26 yen , having backed off an intraday high of 98.48 yen.

Traders said dollar-selling by Japanese exporters at the month-end helped to cap the greenback’s moves versus the yen.

The Japanese currency, which has been locked in an inverse correlation with Tokyo shares for months, also gained some support as the benchmark Nikkei share average sagged 0.6 percent .

The yen’s rise was limited, however, as safe-haven bids ebbed as emerging Asian currencies such as the Indian rupee and Indonesian rupiah regained a bit of calm after a sell-off earlier in the week.

“Things have settled down compared to the situation we saw before, in which Asian currencies were sold off,” said a trader for a Japanese bank in Singapore.

Given the relative calm in emerging Asian currencies and stock markets, sentiment was unlikely to tilt too strongly in the direction of yen buying, the trader added.

Jitters about Syria were also temporarily put aside after the British parliament rejected a motion supporting military action, a setback to Western governments looking to punish President Bashar al-Assad for what they believe was his use of chemical weapons against civilians.

Following the parliamentary vote, British Defence Secretary Philip Hammond confirmed Britain would not be involved in any action against Syria.

Moves among major currencies were subdued overall, with the dollar index holding steady at 81.955, having set a high of 82.067 on Thursday, its highest level since Aug. 5, or highest in nearly four weeks.

The dollar had risen broadly on Thursday, partly due to an upward revision to second-quarter U.S. economic growth, which bolstered the case for the Federal Reserve to begin winding down stimulus next month.

The euro held steady near $1.3243, holding above Thursday’s two-week low of $1.3219.

The euro has support at the Aug. 15 trough around $1.3205. A break there will pave the way for a retest of the Aug. 2 low of $1.3188.

Emerging market currencies were off their recent lows as authorities in the worst-hit centres were forced into action to defend them.

This week alone, India, Indonesia and Brazil acted to stem an outflow of funds from their markets, which have fallen on hard times as investors moved to position for a world with less easy money from major central banks.

On Thursday, Indonesia’s central bank raised its main interest rates for a third time in four months after the rupiah currency slumped to its lowest level in more than four years earlier this week.

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