TOKYO (AFX-ASIA) - The dollar was sharply lower against the yen in midafternoon trading, hit by active profit-taking after Chief Cabinet Secretary Yasuo Fukuda warned of the sharpness of the recent depreciation of the yen, dealers said. The dollar rallied to 133.37 yen earlier after Fukuda said Japan can cope with the yen's current level against the dollar, but turned lower after the Chief Cabinet Secretary later warned of the rapidness of the fall in the value of the yen. "The current level of the yen is within the range that Japan can cope with," Fukuda said. "But if (the exchange rate) moves too drastically, (Japan) may see difficultly in doing business." Daiwa Bank dealer Nobuaki Kubo said that today's price movement underscored the fact that the market has been and is still focusing, almost solely, on remarks by policy makers. "(Fukuda's) remarks had strong influence today because it came when there was large accumulation of long positions on the dollar." "Now, the market is cautiously waiting when, or at which levels, new remarks will appear," he said. Concerns over rises in capital repatriation by Japanese institutional investors also weighed on the top-side of the dollar, together with fears over growing opposition on a weak yen policy by Asian countries and US exporters. Earlier this week, GM CEO Rick Wagoner raised concerns over the adverse impact of the sharp rise in the value of the dollar on export activity. Prime Minister Junichiro Koizumi has scheduled visits to Southeast Asian nations this week. State Minister for Economic and Fiscal Policy Heizo Takenaka said he has not heard of any adverse comment from senior Bush administration economic officials on the recent depreciation of the yen. "The US administration is believed to be basically happy with a strong dollar, as it is positive for offshore debt finances," Kubo said. "The Japanese authority, too, has apparently no intention of changing the basic foreign exchange stance which favors a weak yen." "The underlying weak yen trend will not change, but seasonal supply and demand conditions will slow down the pace of the fall of the yen," he added. The euro was rangebound against the dollar due to a lack of fresh leads, while enthusiasm over the launch of euro notes and coins fading further, dealers said. "In the near-term, prospects are looking unimpressive, as adjustments of long positions in the euro are likely to continue," Kubo said. "But in the long-run, the currency is a buy."