TOKYO, Nov 11 - The dollar briefly jumped above 109 yen on Tuesday as speculation swirled in the market that the Japanese authorities were intervening after the yen matched a three-year high against the greenback overnight. Ministry of Finance officials declined to comment on whether they had stepped in to stem the yen's rise. But market sources said that Japan had intervened in New York after the dollar retested three-year lows of around 107.85 yen, and started bidding again on Tuesday when the dollar was near 108.65 yen. The greenback rose as high as 109.09 yen . It was trading at 108.75/80 yen at 0316 GMT. The market has been nervous about possible Bank of Japan (BOJ) intervention after the dollar fell in a relief rally following the re-election of the coalition government of Prime Minister Junichiro Koizumi on the weekend. "The market is not longer worrying about whether Japan will intervene -- everyone expects intervention. They are just wondering at what level the BOJ will bid," said Takashi Toyahara, a forex manager at Nomura Securities. Japan's top financial diplomat, Zembei Mizoguchi, said on Tuesday he could not comment on whether Japan had intervened, but said officials would not tolerate excessive currency moves. Echoing Mizoguchi, Japanese Finance Minister Sadakazu Tanigaki said the authorities would act against sudden movements.
"Judging from the overall trend, last night's moves were rather abrupt," he told a news conference. "If there are sudden moves that do not reflect fundamentals, we will act as and when needed." Japan spent a record amount on currency intervention during the July-September quarter, selling 7.5512 trillion yen, equivalent to $69.4 billion at Tuesday's exchange rate. Japan has intervened heavily in the foreign exchange market this year in an attempt to keep the yen in check and keep alive the country's export-led economic recovery. On September 30, when Japan confirmed that it had intervened through the New York Federal Reserve, Japan sold a massive 1.0667 trillion yen, the fifth-biggest daily amount on record. "(Intervention) data released yesterday provided more clear evidence that Japan will keep intervening to stop the yen's rise," Toyahara said. The dollar/yen was also dragged down by selling in yen cross trade, especially in euro against the yen, with dealers attributing the sales to redemption in euro bonds. The euro was at 124.82/85 yen against 124.89/03 in late U.S. trade, having fallen as low as 124.18 yen on Monday, a 10-month low. Against the dollar, the single currency was trading at $1.1478/81 versus 1.1470/76.
MACHINERY DATA DUE
Dealers were looking ahead to Japan's September machinery orders data, due at 0500 GMT, for a fresh excuse to bid up the yen. A ' poll of 28 economists produced a median forecast for a 5.1 percent rise in core orders from the previous month, helped by buoyant exports. Forecasts ranged from a fall of 1.5 percent to a rise of 12.3 percent. Compared with September last year, orders were seen up a median 7.7 percent. Dealers said that the yen could rise on a strong reading. "Usually, it's rare that the market actively trades on Japanese data, but that is a sign that many people want to create yen long positions now," said a dealer at a Japanese bank. ($1=108.83 yen)//