TOKYO, Dec 25: The dollar stayed firm in Asian trade on Tuesday as investors welcomed a large cash infusion into Merrill Lynch amid the subprime mortgage woes, dealers said.

The US unit stood at 114.00 yen in afternoon trade, easing slightly from 114.40 yen in New York Monday afternoon, but sharply up from 113.07 yen on Friday in Tokyo before Japanese players went into a three-day weekend.

The Tokyo market was off Monday for a national holiday.

The euro stood at 1.4391 dollars and 164.06 yen, compared with 1.4401 dollars and 164.50 yen in New York.

Investors were heartened by the announcement that Merrill Lynch had won large cash infusions of up to $6.2 billion from various investors, including $4.4 billion by a Singapore state-owned investment group.

Financial markets have seen turbulence for months over concerns about the US “subprime” sector, in which high-risk customers extended loans at the height of the housing boom are struggling to make mortgage payments.

The subprime trouble has raised worries about a credit crunch as financial institutions rush to cover their losses.

“With the news about Merrill, there is a sense that we are seeing the last of all the bad news,” said Mitsuru Sahara, senior vice president at Mitsubishi UFJ Bank.

“It appears that participants are willing to take more risks. We saw American brokerages being hit hard, but either they are receiving some sort of help or the impact of the damages is now ending.”He said the market was also returning “to the situation where people are again wanting to place their funds in nations with high-interest currencies.”Japan has the lowest interest rates of any major economy. Dealers looking for higher returns often place cash in high-interest rate economies such as Australia and New Zealand.

Investors are returning to the dollar, although the subprime woes still made them cautious, Societe Generale Asset Management senior economist Akio Yoshino said.

“The concerted liquidity injection by the US, European Central Bank and other central banks, together with the recapitalisation plans by private financial institutions, helped revive appetite for the dollar,” he said.

“But investors have not recovered the appetite for risky assets amid lingering concerns about the subprime crisis, which may resurface depending on the quarterly results of US banks,” he said.

Market participants, however, are closing up their positions as the year-end draws near.

Against other Asian units, the dollar fell to 1.4528 Singapore dollars from 1.4541 on Monday, to 32.508 Taiwan dollars from 32.521, to 41.27 Philippine pesos from 41.50 and to 9,400 Indonesian rupiah from 9,411.

But the greenback rose to 33.68 Thai baht from 30.2350, and to 939.30 South Korean won from 938.60. —AFP