Dollar strengthens

TOKYO: The dollar found some traction on Monday following last week´s steep fall and managed to hold above a three-year low against a basket of currencies.

The dollar index against a group of six major peers was mostly steady at 89.045 after enjoying a modest bounce on Friday following its descent to 88.253, its lowest since December 2014. The U.S. currency has been weighed down by a variety of factors this year, including concerns that Washington might pursue a weak dollar strategy and the perceived erosion of its yield advantage as other countries start to scale back easy monetary policy.

Confidence in the dollar has also been shaken by mounting worries over the U.S. budget deficit which is projected to balloon to $1 trillion in 2019 amid a government spending splurge and large corporate tax cuts.

While these negative factors were not expected to go away any time soon, last week´s downturn was so rapid that some buyers were seen to have waded in to pick up the greenback at perceived bargains.

"The slide by the dollar last week was perhaps overdone - for example, the dollar´s drop to the mid 105 yen level was too rapid," said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.