Dollar nudges higher against yen in Asia

The dollar rose slightly against the yen in Asian trade Wednesday, propped up by a drop in oil prices and renewed speculation about possible US interest rate rises, dealers said.

The US currency gained to 107.33 yen in Tokyo afternoon trade from 107.25 in New York late Tuesday.

The euro edged up to 1.5788 dollars after 1.5781 and to 169.44 yen from 169.27.

"A fall in oil prices is the main reason for the stronger dollar, along with hawkish comments by the Philadelphia Fed," said Kanako Oikawa, a currency strategist at Traders Securities.

Philadelphia Federal Reserve president Charles Plosser warned in a speech that a hike in US interest rates was unavoidable in the short-term in the face of inflation pressures.

While Plosser is seen as one of the most hawkish members of the Fed's rate-setting committee, his remarks rekindled speculation about possible US rate hikes that could boost the dollar, dealers said.

Investors generally prefer currencies offering higher yields.

US stocks staged a late rally Tuesday on easing worries about high energy costs and renewed interest in the battered financial sector.

The dollar also found support from US Treasury Secretary Henry Paulson, who reiterated Washington's preference for a strong currency and renewed his backing for troubled US mortgage finance giants Fannie Mae and Freddie Mac.

Markets were watching to see whether the euro will strike fresh record highs above 170 yen.

"The recent trend of the euro's steady rise against the yen is not likely to change anytime soon," Mitsuru Sahara, a senior dealer at Bank of Tokyo-Mitsubishi UFJ, told Dow Jones Newswires.

"The euro may rise to 175 yen over the next few weeks."

Against Asian currencies, the dollar fell to 1,013.70 South Korean won from 1,017.1 on Tuesday, to 9,147.50 Indonesian rupiah from 9,165.00, to 44.05 Philippine pesos from 44.65 and to 33.35 Thai baht from 33.36.

But it rose to 1.3594 Singapore dollars from 1.3524 and to 30.375 Taiwan dollars from 30.37.