Dollar falls against yen in Tokyo morning.

TOKYO, Sept. 27 Kyodo

The U.S. dollar fell against the yen in Tokyo on Monday morning, losing its earlier gains on profit-taking.

At midday, the dollar was quoted at 105.03-05 yen, down from 105.57-62 yen at 9 a.m. but up from 103.90-104.00 yen late Friday in New York. It traded at 104.41-44 yen in Tokyo late Friday.

In the morning, the U.S. currency moved between 104.70 yen and 106.00 yen.

Earlier in the morning, the dollar rose to 106.00 yen as buying was encouraged by a Bank of Japan (BOJ) statement released at the Group of Seven (G-7) meeting of finance chiefs Saturday that the central bank will explore ways to improve money-market operations.

Later however, profit-taking occurred on reports that the BOJ has no plans to change its monetary policy, dealers said.

Players regarded the BOJ statement at the G-7 meeting, held in Washington, as indicating a readiness for further monetary easing to stem the yen's rise against the dollar.

However, such hopes were hurt on reports that at a hastily  called news conference Sunday in Washington, Hayami had said the BOJ stance on monetary policy "has not changed."

"The market had been hopeful for changes (toward monetary easing), but Hayami negated the stance taken earlier at the G-7 meeting," said Minoru Shioiri, deputy manager of foreign exchange at Nippon Credit Bank.

Dealers said the central bank's reluctance to further ease its credit grip was apparent in the stance it took in the Tokyo money market Monday morning.

"The BOJ refrained from expanding the surplus in the interbank market from the usual amount of 1 trillion yen," said Takashi Toyahara, a foreign exchange manager at Nomura Trust and Banking Co., adding this led U.S. players to sell the dollar.

Dealers said the U.S. currency is likely to be trapped narrowly at the 105 yen level for the time being amid a lack of fresh factors.

"Players are caught in a bind -- on the one hand, the Nikkei index (of Tokyo stocks) is not strong enough for them to rush to buy the yen. On the other hand, there are no follow-up moves by the central bank and other G-7 partners to prop up the dollar," Shioiri said.

At midday, the euro traded at 1.0443-0445 dollars and 109.68-72 yen in Tokyo, compared with 1.0435-0445 dollars and 108.50-60 yen in New York late Friday.