Tokyo - The dollar resumed its uptrend against the yen on Thursday after suffering a sharp sell-off in the previous session, with analysts tipping the greenback to extend its gains.
On Thursday, the dollar recovered some ground, buying 123.06 yen from 122.67 yen in New York trading. The greenback topped the 125 yen level, a 13-year high, earlier this week.
Bank of Japan chief Haruhiko Kuroda sent the yen soaring on Wednesday when he said the Japanese unit's recent sell-off was “unlikely” to continue, even if the Federal Reserve hikes interest rates. The dollar fell to 122.70 yen around 124.50 yen.
“Everyone was troubled with the recent plunge in the yen to the 125-level, so Kuroda's comments became a welcome rain in the drought,” said Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities.
“But so long as the BoJ sticks to its easing stance, it's hard to see the yen continuing to rise,” he told Bloomberg News.
The dollar has continued to strengthen as a string of upbeat US data show an economy in recovery, putting pressure in the Fed to lift interest rates. Expectations are high for an increase before the year's end.
At the same time the BoJ is pushing on with a vast programme of monetary stimulus, including a bond-buying scheme similar to that recently finished by the Fed.
Capital Economics said in a commentary that it expects the yen “to fall a lot more”.
“We do not think that Kuroda's comments should be interpreted as signalling a desire for a stronger currency,” it added.
“At most he is cautioning against excess volatility after recent sharp falls, while making a nod to domestic concerns that a weaker yen raises the cost of imports.”
A falling yen is a plus for Japanese exporters' profitability, but there are growing concerns about its weakness pushing up import costs, and hurting consumer and business spending.
In other trading, the euro fetched $1.1301 and 139.06 yen, against $1.1324 and 138.92 yen in New York as investors track Greece's debt talks.
The leaders of Greece, Germany and France agreed on Thursday to intensify efforts for a bailout deal after late-night talks aimed at preventing Athens from going bankrupt ended without a breakthrough.
AFP