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Dollar steady on US optimism, but risks loom

TOKYO--The dollar was steady during Asian trade on Monday, buoyed by optimism about the U.S. economic recovery.

The greenback bought 101.96 yen following gains it made at the end of last week which pushed it to 102.06 yen in New York on Friday.

The euro was also little moved, buying US$1.3611 and 138.76 yen, against US$1.3597 and 138.79 yen in New York.

Dealers were encouraged by the U.S. Federal Reserve's decision last week to retain the ultra-low interest rate policy. The bank's chief indicated rates would remain low well into next year.

Once the U.S. economy shows clear signs of recovery, the nation's short-term interest rates will likely rise and boost the dollar against the yen, said Akira Moroga, manager of the forex products group at Aozora Bank.

Until then, however, “market participants will likely watch each U.S. economic indicator” such as GDP data to be released on Wednesday, he told Dow Jones Newswires.

However, it was unlikely to be all plain sailing for the U.S. unit.

Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, warned that a weaker yen and higher Japanese stocks are unlikely to continue to coexist.

The current strength of Wall Street shares, high hopes for the upcoming Japanese growth strategy, and expectations for additional monetary easing by the Bank of Japan are likely to recede over time, he said.

The dollar was mixed against other Asia-Pacific units.

It fell to SG$1.2484 from SG$1.2493 on Friday, to 1,018.20 South Korean won from 1,019.22 won and to 60.18 Indian rupees from 60.31 rupees.

The greenback rose to 32.46 Thai baht from 32.45 baht, to 11,970.80 Indonesian rupiah from 11,967.00 and to 43.78 Philippine pesos from 43.77 pesos.

The Australian dollar bought 94.39 U.S. cents against 94.07 cents, while the Chinese yuan changed hands at 16.37 against 16.32 yen.

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