By Cornelius Luca
New York, March 19 (BridgeNews) - The dollar reached a fresh 22-month high of 123.65 yen after the Bank of Japan (BOJ) said it will try to inject more money into its sagging economy by lifting banks' reserves in order to push interest rates back to zero. A lethal mix of profit-taking, hedge fund sales and comments from BOJ Governor Masaru Hayami indicating he is opposed to a further fall in the yen sent the pair into negative territory.
* * * Weighing on dollar/yen was also a comment on a possible joint intervention by the Group of Seven industrial nations to support the flagging yen. Italian Foreign Minister Lamberto Dini told news agency Ansa on Monday the G7 must consider a concerted intervention if the yen depreciates further, blaming the present weakness on the slide in stock prices and outflow of foreign capital.
The dollar trimmed losses after slipping to four-day lows versus the euro and the Swiss franc. Sterling/dollar slipped within Friday's range, while dollar/Canada fell from a new 30-month high of 1.5703. U.S. traders will focus this week on the Federal Open Market Committee meeting on Tuesday, when the Fed will decide if or how much it will cut interest rates. Market consensus calls for a 50-basis-point ease, but Fed funds futures are hinting at a 75-basis-point rate cut. Market participants will likely keep the dollar in two-way trading versus both the yen and the euro.