By Kanako Chiba and Mari Murayama
Tokyo, Nov. 14 (Bloomberg) -- The dollar, little changed after its biggest gain in three weeks, may rise again today after U.S.-backed forces entered Kabul behind fleeing Taliban troops, pushing stocks higher on signs the war on terrorism is advancing.
The currency may also climb on expectations a report will show U.S. consumers spent more in October than at any time in at least nine years, fueling optimism the economy will rebound soon.
The U.S. currency traded at 121.58 yen, unchanged from New York yesterday, when it had its biggest gain since Oct. 22. Against the euro, it bought 88.09 U.S. cents, from 88.10 in New York, when it climbed to a three-month high.
``War progress in Afghanistan and U.S. stock gains are helping the dollar,'' said Masahiro Ishikawa, a vice president for foreign exchange at Banc One Corp.
The Nasdaq Composite Index rose 2.8 percent and the Dow Jones Industrial Average climbed 2.1 percent, boosting demand for the currency to buy shares.
A gain in a U.S. report on retail sales today may push the dollar even higher.
``The market is focusing on the report as it will give a sign of consumer behavior after the terrorist attacks,'' said Toshihiko Masaki, a foreign exchange manager at ABN AmroBank NV. ``As the most important shopping season of Christmas is coming up, a rebound in consumption will push up the dollar.''
Retail Sales
U.S. retail sales probably rose 2.5 percent last month, as automakers drew buyers with zero percent financing and falling clothing costs boosted sales, a survey of analysts by Bloomberg News showed. That would be the biggest monthly gain since current sales records began in 1992.
`` A strong consumption number will help the dollar,'' Ishikawa said.
The dollar is 1.9 percent stronger against the euro and 0.6 percent higher against the yen compared with Sept. 10, the day before terrorists hijacked four U.S. jetliners.
The dollar may be also helped after Zembei Mizoguchi, director-general of the Ministry of Finance's international bureau, suggested Japan may sell its currency to help increase the value of exporters' earnings, which account for about 10 percent of the nation's economy.
``Should there be a speculative rise in the yen, the government will take quick action to halt it,'' Mizoguchi told reporters. Finance Ministry Masajuro Shiokawa suggested Saturday the government might sell the currency.
``After a series of authorities' comments, the market consensus is the government may intervene should the yen strengthen above 120 against the dollar,'' said Fumihiko Kawano, foreign exchange manager at Nomura Securities Co.
The ministry instructed the Bank of Japan to sell 3.2 trillion yen ($26.3 billion) in late September to halt the currency's rise.
In other trading, the dollar was little changed at 1.6703 Swiss francs from 1.6702 in New York when it surged to its biggest gain in 10 months. The British pound was unchanged at $1.4415.