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Dollar, euro rise against yen, driven by strong Asian equities.

TOKYO, Oct. 3 Kyodo

The U.S. dollar rose to the lower 116 yen level while the euro edged higher to the mid-164 yen zone Wednesday in Tokyo as the risk-taking appetite of investors was boosted by strong Asian equities.

At 5 p.m., the dollar was quoted at 115.98-116.00 yen, compared with Tuesday's 5 p.m. quotes of 115.69-79 yen in New York and 115.43-46 yen in Tokyo.

It moved between 115.56 yen and 116.23 yen during the day, changing hands most frequently at 116.00 yen.

The euro was quoted at $1.4175-4178 and 164.42-46 against late Tuesday's quotes of $1.4150-4160 and 163.78-88 in New York, and

$1.4180-4183 and 163.71-75 yen in Tokyo.

While both the dollar and the euro moved within a limited range against the yen during most of the day, dealers said both currencies gained strength after the 225-issue Nikkei Stock Average jumped more than 150 points or 0.90 percent at its close following marginal gains in the morning.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange also rose more than 20 points or 1.48 percent, encouraged by rallies in Asian markets that saw rises in Hong Kong's Hang Seng Index and India's Bombay Stock Exchange Sensitive Index.

''A strong dollar and weak yen trend was ignited by strong equities in Tokyo and Asia,'' said Toru Umemoto, chief currency strategist at Barclays Bank Plc.

''Rising stocks are driving a strong euro against the dollar,'' said Ryohei Muramatsu, senior currency trader at Commerzbank.

Currency traders also said market optimism that the U.S. subprime mortgage crisis has largely bottomed out after major U.S. and European banks recently revealed their housing-related losses has also spread to the Asian region.

''Investment funds are returning to Asia again as a sense of relief has spread globally,'' said Muramatsu.

Dealers also said jittery investors were waiting for a slew of economic figures from the United States, including the Institute for Supply Management's non-manufacturing index for September due out later Wednesday and September's nonfarm payrolls figure to be released Friday.

''Since there is a widespread expectation that the employment figures will not be that bad, the market will respond with dollar selling if they actually turn out to be negative,'' warned Barclays' Umemoto.
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Publication:Japan Weekly Monitor
Date:Oct 6, 2007
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