11 January 2001, 09:51  Forex: Dollar higher vs the yen midafternoon in Tokyo on equity weakness

TOKYO (AFX-ASIA) - The dollar was higher against the yen at midafternoon, supported by active short-covering amid the unabated slide of the Nikkei 225 index, dealers said.
Eisuke Sakakibara, a former vice finance minister for international affairs, said in an interview with the Jiji Press that the dollar may rise as high as 130 yen if the Nikkei 225 index falls to below 13,000 yen level.
The dollar hit an intra-session high of 116.88 yen.
"The market is also now testing the strength of the U.S. administration's commitment to a strong dollar policy," Yasuda Trust and Banking Co Ltd's foreign exchange assistant manager Takashi Fujieda said.
Lawrence Lindsey, U.S. president-elect George W. Bush's top economic advisor, reiterated the new administration would maintain a strong dollar policy.
"To be honest, however, no one can tell the exact stance of the new administration," Fujieda said.
The dollar failed to extend its gains over the 117 yen level as the Nikkei 225 index stayed above the key 13,000 point level. The dollar's further gains were also stemmed by active selling by Japanese exporters and investors' hesitance to take fresh positions ahead of U.S. retail sales and PPI data later today, dealers said. In addition, active profit-taking by U.S. fund managers put a brake on any sharp gains of the dollar against the yen, they said.
Yasuda's Fujieda said that despite the sustained downward pressure on the yen, it may move with strong downside support against the dollar in the coming weeks ahead of the U.S. FOMC meeting later this month. "In a way, the market had largely priced in any conceivable negative leads for the yen, by pushing down its value to where it is now," he said.
"With currently available leads alone, it may be difficult to see a major breakthrough to beyond the 120 yen level."
The euro, meantime, was bid firmly against the dollar thanks to the underlying perception that any correction of the european currency will be short-lived and that it may move eventually towards parity with the dollar, dealers said.
However, in the near-term, the euro-dollar sector is expected to remain volatile ahead of the U.S. FOMC meeting, they said.

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