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Dollar trades in mid-115 yen in Tokyo morning deals.

TOKYO, June 20 Kyodo

The U.S. dollar traded in the mid-115 yen level Tuesday morning in Tokyo, staying solid on expectations that the U.S. Federal Reserve will raise short-term interest rates.

At noon, the dollar traded at 115.45-48 yen, compared with its 5 p.m. Monday quotes of 115.49-59 yen in New York and 115.60-63 yen in Tokyo. It moved between 115.37 yen and 115.63 yen during the morning.

The euro traded at $1.2571-2574 and 145.14-19 yen, against its 5 p.m. Monday quotes of $1.2570-2580 and 145.24-34 yen in New York and

$1.2588-2591 and 145.55-59 yen in Tokyo.

The dollar stayed almost flat in the mid-115 yen level after hitting the session high of 115.63 yen before 10 a.m., as it was sandwiched between profit-taking and buying by investors expecting that interest rate differences between the United States and Japan will remain for a while.

''The underlying trend is dollar-bullish,'' said Akihiro Tanaka, planning manager at the market trading division of Resona Bank.

''The dollar's firmness is underpinned by the recent risk-averse sentiment on the back of global downturns in stock and commodity prices, as well as a lack of fresh market-moving factors for the day,'' he said. However, the dollar's upside is capped and it is unlikely to break the 116 yen line anytime soon, he said.

Investors were buying the dollar as a ''safer currency'' but the move has paused as ''We know the U.S. rate hikes will not continue forever,'' Tanaka said.

Market players are still watching news concerning North Korea's possible missile launch, which may trigger selling of the yen, dealers said.

In New York on Monday, the dollar briefly rose to 115.75 yen, its highest level since late April, on concern over a possible North Korean missile launch and receding prospects of higher Japanese interest rates.
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Publication:Japan Weekly Monitor
Date:Jun 26, 2006
Words:319
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