The dollar rose against the yen Friday in Asia, despite stronger-than-expected Japanese consumer price data that stoked speculation Japan's central bank may end super-easy policy soon. The U.S. dollar was trading at 116.36 yen in Tokyo by mid-afternoon, up 0.56 yen from late Thursday in New York. The euro fell slightly to $1.2030 from $1.2033 Thursday.
Japanese foreign exchange players took advantage of the yen's initial gains on CPI figures to settle accounts and invest in foreign assets, traders said.
Immediately after the release of the data, which showed that the country's core consumer price index rose 0.5 percent in January, its fastest pace in eight years, the dollar dropped to a session low of 115.56 yen as U.S. investment banks and hedge funds snatched up the Japanese currency.
The data made some traders believe that the central bank would end its policy at the next meeting, scheduled for March 8-9, rather than wait until April, prompting them to sell dollars for yen, dealers said. But the tide soon turned as Japanese importers, mutual funds and institutional investors sold into the currency's strength, spurring those who had earlier offloaded dollars to hastily buy them back.
"Whether the central bank makes its move in March or in April, I don't think the market will be at all surprised," said Mitsuru Sahara, senior foreign-exchange manager at the Bank of Tokyo-Mitsubishi UFJ.