Yen supported by G7 meet

The yen was supported on Tuesday as wariness that the Japanese currency's broad weakness may be scrutinised at a weekend meeting of the Group of Seven financial heads continued to spur yen short covering.
European officials have said the G7 will take up the yen issue, prompting traders to close short yen positions for now, particularly after data last week showed that such speculative positions had hit a record high for the third straight week.
Traders said this short covering could support the yen for now, although the overall trend to sell the yen due to the currency's low yield remained well intact.
"The market view remains for more selling of the yen for other currencies, but the yen's short positions as a result of such trading have also built up substantially, making players nervous about the risk of it strengthening," said Mitsuru Sahara, a senior trader at the Bank of Tokyo-Mitsubishi UFJ.
The G7 meeting of finance ministers and central bankers in Essen, Germany, on February 9-10 remains the focus as European officials have been calling for debate on yen weakness, while Japanese and US counterparts have been playing down the issue.
Japan's extremely low interest rates have encouraged investors to dump yen for higher yields elsewhere, helping to drive the euro to a record high against the yen while the dollar hit a four-year high versus the Japanese currency.
The yen's real, trade-weighted value plummeted to a 21-year low in January. The dollar eased slightly to 120.25 yen from 120.34 yen in late US trade, though it was off a one-month low of 120.02 yen hit earlier in the session.
The euro fell to a one-month low of 155.27 yen earlier in the session and was later trading at 155.40 yen down from 155.59 yen late in US trade. The single currency was little changed against the dollar at $1.2920. European officials have complained that the yen's weakness gives Japanese exporters an unfair competitive edge over euro zone products.
Japanese Finance Minister Koji Omi said on Tuesday that he didn't know what would be discussed at the G7, adding that he would tell the meeting that Japan's economy is recovering amid stable prices. Italian Prime Minister Romano Prodi said on Monday that the weakness of the yen was a serious problem, particularly because the US dollar was also weak against the euro.