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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