Dollar hits 122.12 yen, the highest in four years

Dollar hits 122.12 yen, the highest in four years

TOKYO (AFP): The dollar rose sharply against the yen here yesterday, briefly hitting 122.12 yen, its highest level in almost four years, dealers said.

At 2 p.m. (0500 GMT), the dollar stood at 122.01 yen, compared with 121.39 yen earlier in the day and 120.98 yen in New York late Tuesday, and at 1.6513 marks, up from 1.6506 marks earlier and 1.6475 marks in New York late Tuesday.

"I see active buying of the dollar by U.S. funds, and trust banks are also buying actively," a city bank dealer said.

"I see only one reason to buy the dollar, which is that there is no reason to buy the yen," the dealer added.

Dealers said the dollar was expected to continue to rise against the yen through the balance of Tokyo trading.

"Although investors are worried about sharp rises, their concerns over possible dollar-selling by the Bank of Japan are weakening at this level," the city bank dealer said.

"I see profit-taking on the rising dollar, but buying pressure is stronger than profit-taking."

In the near term, however, ongoing profit-taking is expected to cap the dollar's upside, the dealer said.

"I think rises in the dollar will be limited to up to 122.10- 20 yen at most, because profit-taking by exporters is expected to emerge at that level, " he said.

In Europe, the dollar was whacked at mid-session by statements made by Bundesbank chief Hans Tietmeyer, though the greenback managed to consolidate its positions against the yen.

The dollar was off in early afternoon to 1.6415 marks against 1.6517 in the morning and 1.6479 Tuesday evening, and stood at 122.20 yen against 122. 50 in the morning and 121.18 the previous evening.

Chris Turner, an analyst at Barclays de Zoete Wedd, said the dollar was reacting to remarks by Tietmeyer, who said Wednesday that the process of dollar normalization against the mark is coming to an end.

"In this way, the Bundesbank president warned that the dollar had reached the level that is most satisfactory to the German central bank", said Turner.

He said that the greenback "is consolidating its positions" against the yen. "Operators think the G-7 countries at this stage might appeal for stabilization of rates on the forex market".

London analysts say the pound has become more fragile due to a change of attitude on dealers' part with respect to British monetary policy. No change in interest rates is now expected in the near future.

The dollar was trading in early afternoon at 1.6415 marks (against 1.6479 Tuesday evening in London), 122.20 yen (121.18), 1.42 Swiss francs (1.4277), and 5.5425 French francs (5.5612). Sterling was changing hands at 1.6195 dollars (1.6160), 2.6604 marks (2. 6631), 197.88 yen (195.72), and 8.9827 French francs (8.9869).

Gold fell sharply to 350.15 dollars an ounce against 353.60 Tuesday evening.

The British three-month interbank rate was unchanged at 6.312 percent, while the three-month Eurodollar was stable at 5.437 percent.