Major currencies stuck to tight ranges on Friday as investors waited to see-how Group of Seven and key emerging nations meetings next week would pressure China and other Asian countries to let their currencies rise.
The yen see-sawed yet again as comments from Chinese central bank officials stirred speculation whether or not China would revalue its pegged yuan currency after the G7 meeting.
It hit a 1-1/2 week high after a monetary policy committee member of the Chinese central bank said in Switzerland the time was ripe for China to move toward a more flexible FX regime. The yen then erased gains after another central bank official in Beijing said China would keep the yuan basically stable.
"Movements are in line with comments coming out of China. There is high sensitivity especially with the G7 coming up, although we don't think anything major will come out of the G7," said Trevor Dinmore, currency strategist at Deutsche Bank.
By 3:50 a.m. EST the dollar was at 103.20 yen after falling to 102.38 earlier in the day. The euro was slightly higher on the day at 134.58 yen. The euro was steady at $1.3037, in the middle of recent ranges.
In the run-up to the meeting, European monetary policymakers have been urging Asia to let their currencies rise to share the burden of dollar weakness.
Comments from Chinese officials in recent days have sparked a rash of knee-jerk buying and selling of the yen, used as a proxy for Asian currency speculation.
China has resisted pressure for revaluation, saying more work needs to be done before changing the policy.