The New Nation - Internet Edition

AFP, Tokyo

The dollar rebounded against the yen but fell towards record lows versus the euro in Asian trade on Tuesday after Federal Reserve chairman Ben Bernanke warned that US mortgage woes may deepen, dealers said.

The dollar stood at 114.83 yen in Tokyo afternoon trade, up from 114.63 in New York late Thursday when it fell as low as 113.98. The euro firmed to 1.4089 dollars from 1.4065. On Thursday, the single European currency spiked to a new record high of 1.4098 dollars. The euro rose to 161.78 yen after 161.25 yen. The dollar rebounded as players were wary of pushing it below 114 yen yet, said Hironobu Hagi, deputy general manager at Shinsei Bank's capital markets division. "But it doesn't mean the dollar-sellling trend has changed," Hagi said, noting ongoing concerns about the US housing and credit markets.

The dollar was also hurt by speculation that Saudi Arabia may abandon its peg to the US currency after its monetary authority refrained from following the Fed in cuting rates this week, analysts said.

Bernanke said Thursday that US housing woes may deepen, saying problems in subprime mortgages to risky borrowers "have far exceeded even the most pessimistic estimates." On Tuesday the Fed slashed its base federal funds rate by a half point to 4.75 percent to try to limit the fallout from credit market distress and a severe housing downturn.

Dealers largely ignored the race to become Japan's next prime minister. The ruling Liberal Democratic Party is scheduled to elect a successor on Sunday to Prime Minister Shinzo Abe, who announced his resignation last week.

The pound, which has been pressured recently by the crisis engulfing British lender Northern Rock, rose slightly to 2.0109 up from 2.0079 dollars.

The Canadian dollar, which on Thursday rose to parity with the dollar for the first time since November 1976, traded at 1.0006 in early Asian trade.

Against other Asian units, the dollar fell to 1.5033

Singapore dollars from 1.5058 a day earlier, to 921.00 South Korean won from 923.10, and to 33.04 Taiwan dollars from 33.08.

But it gained to 9,185 Indonesian rupiah from 9,180, to 45.44 Philippine pesos from 45.40, and to 34.21 Thai baht from 31.86.