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Dollar under pressure in Asia after Bernanke comments

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(Globalpost/GlobalPost)

The dollar was under pressure in Asia Wednesday after the Federal Reserve head said the bank's stimulus policies would remain in place, while Europe concerns saw investors flock to the safe-haven yen.

Fed chief Ben Bernanke quelled speculation over an early end to the Fed's huge monetary easing programme, telling a Senate panel in Washington that it was having an impact but was still needed to get the economy back on track.

The greenback was weaker at 91.70 yen in Tokyo afternoon trade, from 91.93 yen late Tuesday in New York, while the European single currency slipped to $1.3059 and 119.76 yen, from $1.3061 and 120.08 yen.

Bernanke's comments suggested he "still appears to believe that the benefits (of easing) outweigh the costs, but the net benefits will continue to shrink as the Fed buys more assets this year", said London-based Capital Economics.

The Fed chief also sounded the alarm over huge US budget cuts looming within days which could deal a heavy blow to the fragile US economy.

Italy's inconclusive national elections raise fears about whether debt-hit Rome will continue with its unpopular austerity measures aimed at paying down its debt.

Investors fear failure to do so could have repercussions around the eurozone.

Markets will be looking to Italian bond auctions later in the day to gauge confidence in the country's fiscal health with the sales likely to "meet firm demand given the recently-high yields and small amount of each issuance", Barclays Bank currency strategist Bill Diviney told Dow Jones Newswires.

"Still, we can't rule out that the tenders turn out to be poor due to the ongoing jitters," which could weigh on the euro, he said.

While dealers have moved to the safe-haven yen, the unit is still facing downward pressure after reports that Tokyo would this week nominate a supporter of aggressive monetary easing to become the next Bank of Japan governor.

The British pound fell further in Tokyo trade, to $1.5110 from $1.5126 in New York, after Moody's last week yanked Britain's triple-A credit rating, citing weak growth and heavy public debt.

The dollar was mixed against other Asia-Pacific currencies, slipping to Sg$1.2381 from Sg$1.2392 a day earlier, to 1,084.20 South Korean won from 1,087.85 won, and to 9,685 Indonesian rupiah from 9,711 rupiah.

It also eased to 29.82 Thai baht from 29.85 baht, and to 53.94 Indian rupees from 54.04 rupees. The greenback was flat at Tw$29.69 and 40.75 Philippine pesos.

The Australian dollar slipped to $1.0219 from $1.0275 while the Chinese yuan held steady at 14.73 yen.

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http://www.globalpost.com/dispatch/news/afp/130227/dollar-under-pressure-asia-after-bernanke-comments