A weaker dollar today helped the yen climb to three-month highs thanks to stronger Japanese markets and repatriation flows.
The yen surged through the 130-to-the-dollar level for the first time this year to 128.92 to the dollar, from 129.65 earlier in Tokyo. The euro bought 0.8787 dollars from 0.8769 overnight in New York.
Analysts said there were several factors starting to weaken the dollar, which has otherwise been well supported recently by strong US economic data and healthier US equity performance.
Some economists said that President Mr George W. Bush's decision to slap tariffs on steel imports had hardly helped the US currency, which benefits more than any other from global free trade.
They noted the tariffs could hint at concern in the US administration over the strong dollar and the wide current account deficit and warned an escalation trade war would harm the US unit further.
"Given that the US economy is built on the principles of free trade, these moves are not seen as boding well for the US dollar and I think we have already seen some of the impact of that," said Royal Bank of Scotland currency expert Mr Neil Parker.
Other analysts pointed to repatriation flows into Japan as it draws closer to the March 31st financial year-end.
Central bankers mulling interest rates in Britain and the euro zone were not expected to buffet exchange rates much. The European Central Bank and the Bank of England were both poised to leave rates on hold at 3.25 per cent and 4.0 per cent respectively.
AFP