TOKYO, Feb 17 - The dollar rose against the yen on Tuesday to its highest level in 11 days as traders grew nervous about possible intervention by the Bank of Japan. Some traders said the spike could have been due to yen-selling intervention by the BOJ, while others said it was likely due to options-related buying or the yen's fall against other currencies. "The move was a suspicious one and could have been intervention, but I am just not sure," said a trader at a major Japanese bank. Last month, Japan spent a record seven trillion yen ($66.38 billion) in intervention. The greenback jumped a quarter of a yen to 106.02 yen , its highest since February 6. By 0642 GMT, it was at 105.81/86 yen compared with 105.42/52 in late European trade. U.S. markets were closed on Monday for Presidents Day. The euro was trading at $1.2767/72 , little changed on the day. Sterling jumped over one yen to a five-year high around 200.20 yen , while the euro hit a high of 135.31 yen .
Although the dollar fell to 3-Ѕ year lows around 105.15 yen last week, traders were getting hesitant about retesting those troughs on the view that the Japanese authorities were determined to defend the 105 yen level. "The lower end of the ranges have been so difficult to break, and people are having to wonder what they would have to do if they built up short dollar positions here," said Hiroyuki Watanabe, a foreign exchange manager at Shinsei Bank. Japanese Finance Minister Sadakazu Tanigaki reiterated on Tuesday that intervention was aimed at curbing speculative movements in the market.
JAPAN GDP AWAITED
Some traders said the BOJ may have stepped in on Tuesday to push up the dollar ahead of Japan's October-December gross domestic product data due on Wednesday. "If the figure comes out strong, the authorities will lose their justification for intervening, especially after the G7 (Group of Seven) countries said forex should reflect fundamentals," said a senior trader at a Japanese trust bank. "Thus they may have intervened to push up the dollar beforehand since they are out to protect 105 yen." The market's consensus is for GDP growth of around five percent on an annualised basis, which would be stronger than the U.S. growth rate of four percent in the same quarter. Off-and-on rumours since last week that the European Central Bank or some of the national central banks in the region might have been selling euros were a sign that the market was also sensitive about the possibility of European authorities stepping into the market, traders added. ECB President Jean-Claude Trichet, pressed continually by European parliamentarians on Monday, declined to comment on whether the central bank had intervened in the market or would do so to curb the euro's strength. For now, traders were awaiting U.S. industrial production data for January due at 1415 GMT and monthly portfolio flow data from the U.S. Treasury. Output growth was forecast at 0.8 percent month-on-month in a poll after a rise of 0.1 percent in December. ($1=105.45 yen)//