TOKYO (AFX-ASIA) - The euro tested parity against the dollar in late morning on talk of liquidations of foreign investments by US-based funds, as well as unwinding of overhedged positions by Europeans, dealers said. The dollar was also higher against the yen as investors used talk of intervention as an excuse to unwind existing positions, they added. "I heard ... there is a huge liquidation of funds in the US and they have repatriated foreign investments," said Hidehiko Inamura, vice-president for foreign exchange at Citibank. He added that European portfolio managers may also be reducing their overhedged positions against the dollar as domestic investors cancel US-market funds due to the downturn in equities there. Investors are also cautious over the possibility of intervention by the Bank of Japan on the dollar/yen, though they are also using this largely as an excuse to unwind dollar-short positions. "At the level of 115 yen everyone expects intervention," Inamura said, but added that the central bank is more interested in smoothing the dollar's decline than holding a level, despite talk that exporters' breakeven point is at around 115 yen. "It all depends on the US stockmarket. The US companies have to clarify their financial statements (during the current earnings season). It may be a good time to change the trend," he said.