TOKYO: The yen retreated against the dollar Thursday, giving up strong gains from the previous session spurred by comments from the head of Japan's central bank as analysts predicted further weakness ahead.
On Thursday, the dollar fetched 123.31 yen from 122.67 yen in New York trading. The greenback topped the 125 yen level, a 13-year high, earlier this week.
Bank of Japan chief Haruhiko Kuroda sent the yen soaring Wednesday when he said the Japanese currency's recent sell-off was "unlikely" to continue, even if the US Federal Reserve hikes interest rates.
The dollar fell to 122.70 yen from around 124.50 yen in morning trade.
"Everyone was troubled with the recent plunge in the yen to the 125-level, so Kuroda's comments became a welcome rain in the drought," said Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities.
"But so long as the BoJ sticks to its easing stance, it's hard to see the yen continuing to rise," he told Bloomberg News.
The dollar has continued to strengthen as a string of upbeat US data show an economy in recovery, putting pressure in the Fed to lift interest rates. Expectations are high for an increase before the year's end.
At the same time, the BoJ is pushing on with a vast programme of monetary stimulus, including a bond-buying scheme similar to that recently finished by the Fed, which has weakened the Japanese currency.
Capital Economics said it expects the yen "to fall a lot more".
"We do not think that Kuroda's comments should be interpreted as signalling a desire for a stronger currency," it added in a commentary.
"At most he is cautioning against excess volatility after recent sharp falls, while making a nod to domestic concerns that a weaker yen raises the cost of imports."
A falling yen is a plus for Japanese exporters' profitability, but there are growing concerns about its weakness pushing up import costs, and hurting consumer and business spending.
In other trading, the euro fetched $1.1304 and 139.49 yen, against $1.1324 and 138.92 yen in New York as investors track Greece's debt talks.
The leaders of Greece, Germany and France agreed Thursday to intensify efforts for a bailout deal after late night talks aimed at preventing Athens from going bankrupt ended without a breakthrough.
The dollar weakened against most other Asia-Pacific currencies, slipping to Sg$1.3438 from Sg$1.3481 on Wednesday, to 1,107.75 South Korean won from 1,111.38 won, and to 33.64 Thai baht from 33.70 baht.
The greenback also eased to 63.78 Indian rupees from 63.92 rupees, to TW$30.90 from Tw$30.96, and to 13,290 Indonesian rupiah from 13,310.
It edged up to 44.98 Philippine pesos from 44.97 pesos.
The Australian dollar rose to 77.67 US cents from 76.92 cents while the Chinese yuan bought 19.82 yen, unchanged from Wednesday.
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