NEW YORK (AFP) — The euro edged higher in volatile trade Thursday as the market focused on problems in currencies in emerging economies.
The euro was trading at 1.2926 dollars around 2100 GMT, up from 1.2867 late in New York on Wednesday.
The dollar slipped to 97.27 yen from 97.79 yen.
The single European currency slid to 1.2728 dollars earlier Thursday in Asian trading, its lowest level since November 2006. It also hit 123.43 yen, a level not seen since December 2002.
The European single currency has now shed more than a fifth of its value since striking a record high of 1.6038 dollars in July.
"The threat of a global recession -- and the simple fact that there doesn't seem to be anything safer -- could well see the dollar continue to find support," said analyst James Hughes of CMC Markets.
The European Central Bank has room for several further interest rate cuts, which would mean the euro would no longer be as attractive compared with the dollar and yen, said Tomoko Fujii, head of economics and strategy at Bank of America in Tokyo.
"Risk aversion is still extraordinarily high but there are a number of macroeconomic factors that are now evolving that will ensure that the yen remains on a firm footing" said Derek Halpenny, Bank of Tokyo-Mitsubishi.
He said these factors include falling oil prices and growing Japanese trade.
The yen was the big winner Thursday, climbing as high as 123.43 against the euro, a level last seen in November 2002.
Since Monday, the Japanese currency's value has increased more than 10 percent.
In Asia, the Hong Kong Monetary Authority on Thursday intervened in the foreign exchange market, buying 3.88 billion Hong Kong dollars' (500 million US) worth of US dollars to maintain the local currency's peg to the greenback.
A spokesman for the HKMA, the city's de facto central bank, said there had been increased demand for Hong Kong dollars in recent days.
Governments in Latin America stepped forward to calm markets left despondent by fears of a global recession and Argentina's decision to nationalize pension funds.
Brazil and Mexico took measures to try to stop the long slide of their currencies against the dollar.
Mexico's central bank said it had sold 1.4 billion dollars in the latest move to support the peso, which sunk to a new record low of 13.80 to the dollar in late trading.
"Growth prospects for emerging economies are worsening," said Christine Li at Economy.com.
"The spillover and contagion across the emerging markets are likely to continue as investors shift their money away from risky assets such as emerging market equities."
In late New York trading, the dollar fell to 1.1589 Swiss francs from 1.1615 late Wednesday.
The pound was at 1.6216 dollars, compared with 1.6297.
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