US dollar softens but new rises tipped


TOKYO–The dollar edged down against the yen Tuesday following a dip in New York, although analysts expect further advances for the greenback as monetary policy in Japan and the United States diverges. The dollar bought 120.18 yen in Tokyo Tuesday, compared to 120.78 in U.S. trade Monday. The euro was at US$1.2305 and 147.98 yen against US$1.2308 and 148.65 yen. The dollar eased as Tokyo and Asian shares retreated on profit-taking, somewhat raising investor aversion to risk. ��There was no incentive-backed news,�� a senior bank dealer told Dow Jones Newswires. But the market’s general expectation for the yen’s continued fall remained intact. Investor demand for the greenback has ramped up since the Bank of Japan widened its monetary base in October to try to kick-start the economy, at the same time as the U.S. central bank looks to tighten policy with a rate rise in response to a strong economic recovery. Friday saw the dollar climb above 121 yen for the first time in more than seven years after the Labor Department said U.S. jobs growth picked up more than expected in November. But while the greenback took a breather in New York Monday, experts expect it to continue appreciating against the yen through 2015. ��The possibility has increased that we will at some stage experience a (dollar/yen) level beyond 124.14,�� said Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley, referring to the 2007 high before the global economic crisis. The dollar is however showing signs of overheating �X sitting about 15 percent above its 52-day moving average, a reference point used to determine a currency pair’s direction.

The dollar also fell against other Asia-Pacific currencies. It sagged to SG$1.3182 from SG$1.3225 on Monday, to 1,107.80 South Korean won from 1,117.50 won. It also eased to 12,345.00 Indonesian rupiah from 12,365.00 rupiah, to 61.87 Indian rupees from 61.91 rupees, to 44.60 Philippine pesos from 44.67 pesos and to 32.95 Thai baht from 33.09 baht. The Australian dollar bought 82.38 U.S. cents against 82.81 cents Monday, and the Chinese yuan fetched 19.38 yen against 19.73 yen.