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Dollar eases to mid-114 yen level in Tokyo morning on Fukui remarks.

TOKYO, June 21 Kyodo

The U.S. dollar eased to the mid-114 yen level Wednesday morning in Tokyo as the market continued to digest Tuesday's remarks by Bank of Japan Governor Toshihiko Fukui indicating willingness to end the zero-rate policy.

At noon, the dollar was quoted at 114.48-51 yen, compared with its 5 p.m. Tuesday quotes of 114.91-115.01 yen in New York and 114.77-80 yen in Tokyo. It moved between 114.38 yen and 114.93 yen during the morning.

The euro was quoted at $1.2622-2625 and 144.50-55 yen, against its 5 p.m. Tuesday quotes of $1.2574-2584 and 144.60-70 yen in New York and $1.2582-2585 and 144.43-47 yen in Tokyo.

Fukui on Tuesday made it clear that there would not be a delay in the BOJ's credit tightening, although there would be no hurry either in ending the zero-rate policy.

''Fukui's remarks came at the perfect time,'' said Kikuko Takeda, manager of the Bank of Tokyo-Mitsubishi UFJ's global market sales and trading division.

''They were good excuses to buy the yen for those who had recently completed dollar short-covering,'' she said.

Until mid-May, the dollar had been under pressure after the Group of Seven financial chiefs in late April called for greater currency flexibility particularly in China, leading to market speculation about stronger Asian currencies including the yen.

But the dollar has regained strength over the past several weeks, supported by investors covering their short-dollar position.

Takeda noted that the dollar's fall would be limited as Fukui ''did not change his stance'' and that most investors expect the U.S. Federal Reserve to raise interest rates later this month and again in August.
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Publication:Japan Weekly Monitor
Date:Jun 26, 2006
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