Dollar hit in Asia by US debt fears

TOKYO: The dollar fell in Asia on Friday as investors ran for the euro and yen on growing fears the US government shutdown could lead to a catastrophic debt default.

The greenback bought 97.22 yen in Tokyo midday trade, from 97.27 yen in New York, where it at one point slipped below the 97-yen mark.

The Bank of Japan's announcement that it would hold off fresh easing measures saw it briefly touch 97.17 yen.

The euro was trading near nine-month highs at $1.3623 from $1.3618, following upbeat eurozone data, although the single currency weakened to 132.34 yen from 132.49 yen.

"Until this US political show ends the (dollar-yen) pair will likely trend lower," said a senior dealer at a Japanese bank.

Also weighing on dollar sentiment were data showing the US services sector, the bulk of the economy, slowed sharply in September after two months of acceleration, offsetting better-than-expected jobless claims figures.

But the bank dealer said the dollar's losses were tempered by end-of-week buying by Japanese importers, as well as hopes for a compromise in Washington that reopens the US government.