Dollar firms in Asia after New York sell-off

TOKYO: The dollar rebounded in Asia on Tuesday after tumbling in New York on speculation that the US central bank will hold off winding down its stimulus programme for the time being.

The greenback fetched 98.40 yen in Tokyo afternoon trade, up from 97.89 yen in New York on Monday.

The euro bought $1.3255 compared with $1.3264, while the single currency edged up to 130.43 yen from 129.85 yen.

"The fact that the (dollar-yen) was supported in New York above yesterday's Tokyo low (of 97.63) encouraged some traders to test the upside," a forex manager at a Japanese bank told Dow Jones Newswires.

But the dollar's rally was likely to run out of steam before the Federal Reserve's two-day policy meeting starting Tuesday and a string of key US economic indicators this week, the manager added.

The Federal Open Market Committee is almost certain to leave its bond-buying scheme in place, analysts say, but the post-meeting statement will be scrutinised for signs of when, and how, it intends to reel it in.

A tapering of the programme would mean fewer dollars sloshing around in the financial system, which would boost demand for it.