Dollar tumbles under 120 yen in Tokyo on last market day of year

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LONDON: The dollar quit early increases to dips under 120 yen in Tokyo trading late on Tuesday, the last market day of the year.
At 5 pm, the dollar stood at ¥119.79-80, down from ¥120.32-32 at the same time on Monday. The euro was at $1.2162-2163, down from $1.2179-2180, and at ¥145.70-71, down from ¥146.56-57.
The greenback hovered around ¥120.70 in the morning after getting a lift versus the Japanese currency in overseas trading the previous day from its strength against the euro on rekindled concerns over the Greek economy.
But the U.S. unit was unable to hold on to the initial level as risk aversion grew among traders on the back of weakness in Tokyo stocks.
In late trading, the dollar dived to levels near ¥119.60 on renewed selling. The U.S. currency extended its fall versus the yen in London later in the day.
“The Greek issue was used as an excuse for selling to lock in profits,” following the dollar’s recent rally against the yen, an official at a foreign exchange brokerage house said.
Investors are cautious after Greece’s parliament failed to elect a new president Monday and a general election in the country has been set for Jan. 25. A left-wing opposition party rejecting austerity steps is now believed to be leading the race.
Meanwhile, given piles of yen-short positions, the Japanese currency is now susceptible to buying to cover the positions, an official at a major securities firm pointed out.
Despite uncertainties about the political situation in Greece, the dollar is expected to remain on an upward trend next year after advancing about ¥15, or about 14 percent, this year, analysts said.
The greenback was stuck roughly in a range between ¥100 and ¥105 in the first half of this year but staged a sharp rise in the second half, hitting a seven-year high slightly below ¥122 in early December.
The dollar’s upward trend versus the yen is expected to continue to be underpinned by the difference between the monetary policy directions in Japan and the United States, analysts said.