FOREX-Dollar rises vs yen, euro after Geithner comments

* Geithner says major currencies roughly in alignment now

* Dollar jumps versus yen on day, euro drops

* But dollar quickly gives up much of its gains

TOKYO, Oct 21 (BestGrowthStock) – The dollar leapt half a yen and
climbed rapidly against the euro on Thursday after U.S. Treasury
Secretary Tim Geithner said major currencies were roughly in
alignment now, although it later gave back some of its gains.

The dollar rose as far as 81.84 yen (JPY=: ) from about 81.00
yen before the comments came out and the euro fell (Read more about the trembling euro. ) 0.6 percent in
a matter of minutes as the market, taking the comments to imply
that the dollar did not need to fall further against major
currencies, covered dollar short positions.

“It’s become a bit difficult to test the dollar’s downside
for now,” said Katsunori Kitakura, chief dealer at Chuo Mitsui
Trust Bank.

“It seems as if the G7 has formed a united front ahead of the
G20 meeting, as he’s saying he’s mainly focusing on emerging
economies when it comes to currencies.”

In an interview in the Wall Street Journal, Geithner divided
currencies into three categories, with the first, including
China’s yuan, undervalued by any measure, while the second were
of emerging economies with flexible exchange rates that intervene
or impose taxes.

The third was the major currencies, “which are roughly in
alignment now”, he was quoted as saying.

The dollar later retreated to 81.25 yen, up just 0.2 percent
on the day, as the market examined the comments more closely.

The Wall Street Journal said the comments suggested that
Geithner saw no need for the dollar to sink more than it already
had against the euro and the yen, but traders pointed out that he
did not say that exactly.

The euro, which fell as far as $1.3872, recovered to $1.3932,
down 0.2 percent on the day.

The dollar has fallen to record lows against the Swiss franc,
hit parity with the Australian dollar and dropped to 15-year lows
against the yen in the past month, driven down by the market in
anticipation of more quantitative easing from the Federal Reserve
possibly as soon as November.

Talk of competitive currency depreciation has flared up ahead
of a G20 finance ministers meeting this week and a G20 summit
next month, as developed countries keep monetary policy extremely
easy to shore up sluggish growth and as capital flows in search
of better yields push up currencies in faster growing emerging
economies.
(Reporting by Masayuki Kitano, Hideyuki Sano, Chikafumi Hodo and
Yoko Matsudaira; Writing by Charlotte Cooper; Editing by Edmund
Klamann)

FOREX-Dollar rises vs yen, euro after Geithner comments