LONDON (AFX) - The yen remained weak against the dollar in thin early trade, continuing its downward spiral from Friday after Bank of Japan cut its discount rate, dealers said.
The dollar rose as high as 117.92 yen. On Friday, the U.S. currency rallied to a two-week high against the yen following the Bank of Japan's decision to lower its discount rate to 0.35 pct from 0.50 pct, the first time since September 1995 it has adjusted the rate charged at its discount window.
Simon Hayley, currency strategist at IDEAglobal.com, said although the central bank's move was considered only minor, the easing has contributed to the yen's decline.
Hayley added that the fact that BOJ Governor Hayami has not repeated his previous comments that the currency is too weak also weighed the yen. "It's reduced market fears of any action by the Bank of Japan to support the yen," he said.
But with Japanese markets closed due to a national holdiday , activity was limited.
Analysts said investors remained focused on this week's big event -- Federal Reserve Chairman Alan Greenspan's testimony to the Senate Banking Committee tomorrow.
The euro rose against the dollar. There was no specific economic news to provide further direction. In addition, players were paring down positions ahead of Greenspan's testimony, dealers said. Meanwhile, sterling moved higher, trading in tandem with euro/dollar in front of UK January producer price data.
Seasonally-adjusted producer input prices are expected to remain unchanged in January from December, and to have risen 6.9 pct year-on-year, according to analysts polled by AFX News.