Dollar struggles after Tillerson's dismissal strikes down recovery

TOKYO - The dollar wallowed against the yen and other major currencies on Wednesday after the sudden dismissal of US Secretary of State Rex Tillerson killed off an earlier bounce in the currency.

US President Donald Trump fired Tillerson on Tuesday after a series of public rifts over policy on North Korea, Russia and Iran, replacing his chief diplomat with loyalist CIA Director Mike Pompeo.

It was deja vu for the currency market and the dollar, which had declined a week ago when the exit of White House economic advisor Gary Cohn undermined investor sentiment towards the greenback.

The dollar was down 0.1 percent at 106.490 yen, having slipped overnight from a 2-week high of 107.300 reached after wariness over a political scandal in Japan waned slightly.

The greenback also lost a bit of traction after the February US inflation data released on Tuesday was in line with expectations, suggesting the Federal Reserve remained on track to raise interest rates at a gradual pace.

Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo, said comings and goings in the White House were becoming something of an everyday occurrence and that dollar's reaction was likely to become more limited each time.

"For the dollar to rise above 107 yen again, it may need a clarification of the ongoing political scandal in Japan in addition to a hint by the Fed at this month's meeting that it might accelerate the pace of rate hikes," Yamamoto said.

The yen had risen against the dollar at the start of the week as a political scandal engulfed Japanese Prime Minister Shinzo Abe and his close ally, Finance Minister Taro Aso.

The Japanese currency advanced as the cronyism scandal raised doubts about Abe's ability to continue pursuing his economic policies, dubbed "Abenomics," which included aggressive monetary easing.

The Fed holds a 2-day policy meeting starting on March 20 and the central bank is widely expected to raise interest rates for the first time this year.

The dollar index against a basket of six major currencies was little changed at 89.711 after it tracked a decline in US yields and shed 0.25 percent on Tuesday.

The euro was steady at $1.2394 after rising 0.45 percent overnight.

The pound was up 0.1 percent at $1.3982 and in close reach of a two-week peak of $1.3994 scaled on Tuesday on the back of the dollar's broad decline.

The Australian dollar was steady at $0.7860 after bouncing to a 2-week high of $0.7898 the previous day on robust business indicators.

source: news.abs-cbn.com

Toshiba CEO to step down over accounting scandal

TOKYO - Japan's Toshiba Corp. said its chief executive was stepping down on Tuesday after an independent investigation found he had been aware the company had been inflating its profits over a number of years.

CEO and President Hisao Tanaka will be replaced by Chairman Masashi Muromachi effective Wednesday, the company said in a statement, adding it was considering appointing outside directors to over half of its board seats.

Tanaka's predecessors, Vice Chairman Norio Sasaki and adviser Atsutoshi Nishida, will also step down after the third-party report showed they also played a part in the overstatement of profits going back to the 2008 financial year.

The report released on Monday said Toshiba had overstated its operating profit by 151.8 billion yen ($1.22 billion) over several years, roughly triple Toshiba's initial estimate.

The findings are expected to lead to the restatement of earnings, a board overhaul and potentially hefty fines at the computers-to-nuclear conglomerate in Japan's worst corporate scandal since Olympus Corp was found to have covered up $1.7 billion in losses in late 2011.

RISKS TO INVESTOR CONFIDENCE
Japanese Finance Minister Taro Aso said earlier on Tuesday that the accounting irregularities at Toshiba were "very regrettable", coming at a time when Japan is trying to regain global investors' confidence with better corporate governance.

"If (Japan) fails to implement appropriate corporate governance, it could lose the market's trust," Aso told a news conference on Tuesday. "It's very regrettable."

Aso declined to comment when asked if Toshiba would face any kind of financial penalty. Sources have said regulators were beginning their own review of Toshiba's book-keeping, based on Monday's report.

The investigation came just as Prime Minister Shinzo Abe has implemented new guidelines to improve the country's corporate governance.

Shares in Toshiba rose 6 percent on Tuesday on relief the report had few nasty surprises. But they are still down around 23 percent since Toshiba first disclosed cases of accounting irregularities in early April.

"Institutional investors and other long-term funds have already unloaded Toshiba shares, so currently the stock price is being driven by short-term investors," said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management.

"The bad news is out. As long as Toshiba won't be delisted, such trade will continue."

source: www.abs-cbnnews.com