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TOKYO - The dollar gained against the euro in Asian trade Tuesday ahead of the US presidential vote as dealers hoped the new leader would work to revive the ailing economy.
The single European currency tumbled after confidence in the economy in the European Union slipped to its weakest level since November 1993.
In Tokyo afternoon trade, the dollar stood at 98.67 yen, down from 99.13 in New York late Monday.
The euro dropped to 1.2585 dollars, down from 1.2635 dollars, and to 124.29 yen from 125.30 yen.
Dealers were keeping a close eye on the US election later Tuesday, expecting that Democrat Barack Obama - who enjoys a strong lead in polls over rival John McCain - would likely draft another government stimulus package.
"We will see the actual results here on Wednesday, but investors have high expectations for the president-elect to come up with more action on the economy," said Saburo Matsumoto, chief forex strategist at Sumitomo Trust
Bank.
"The election to decide the next US president will bring a sense of stability to its economy," he said.
Dealers said investors were reassured by rebounding stock markets and rate cuts last week by major economies including the United States and Japan.
"Investors welcome the rate cuts and the rising share prices," said Masatsugu Miyata, forex dealer at Hachijuni Bank.
Speculation is growing that the European Central Bank and the Bank of England could follow suit this week with fresh rate cuts.
The Australian dollar tumbled by more than 2.5 percent from Monday to 0.6634 US dollars after the Reserve Bank of Australia cut interest rates by a larger-than-expected 75 basis points to 5.25 percent amid concerns of a slowdown.
The Australian dollar, which is higher yielding than most other major currencies, has already taken a beating during the economic crisis.
The dollar was up against other Asian units.
The greenback rose to 11,122.50 Indonesian rupiah from 10,775 late Monday, to 1.4864 Singapore dollars from 1.4657 and to 1,288.6 South Korean won from 1,261.2.
It also inched up to 48.78 Philippine pesos from 48.62, to 35.00 Thai baht from 34.95, and to 32.868 Taiwan dollars from 32.855.
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