Report Lifts Dollar Against the Yen

The dollar rose against the yen in Tokyo on Monday after the Yomiuri newspaper reported that Japan had sold more than $56 billion in yen so far this month, more than a quarter of last year’s total.

“I wouldn’t be surprised if this figure is close to the mark,” said Steve Barrow, a currency strategist in London at Bear Stearns Cos. The Japanese “have given every indication they can continue to do this forever.”

The dollar also advanced against the euro amid speculation that European finance ministers, meeting in Brussels on Monday and Tuesday, would express concern that the single currency’s rise posed a risk to the region’s economic recovery. Belgian Finance Minister Didier Reynders said on his way into the meeting that the euro would be in a “more dangerous zone” if it strengthened beyond $1.30.

The dollar rose to 107.25 yen from 106.63 late Friday in New York, according to EBS. The yen has climbed 9.9% versus the dollar over the last year. The euro fell to $1.2350 from $1.2394 after declining 3.4% last week.

The dollar also rose against the British pound and the Swiss franc, as well as the Canadian and Australian dollars. Markets in the U.S. were closed Monday because of Martin Luther King Day.

Japan’s currency fell even as Prime Minister Junichiro Koizumi said for the first time that the nation’s economy had recovered from recession. Japan, which is trying to prevent the yen’s advance from cutting demand for its exports, may sell more yen, Finance Minister Sadakazu Tanigaki told parliament. He declined to comment when asked about the report in Yomiuri.

“Japan has been putting an absolute floor” under the dollar’s value in terms of yen, said Adam Cole, a senior currency strategist in London at Credit Agricole Indosuez. “We’d probably be the other side of 100 if it weren’t for them.” Barrow at Bear Stearns predicts the dollar will weaken to 95 yen this year.

The euro fell for the first week in more than two months last week after European officials expressed concern that its advance was hurting demand for exports. Austrian Chancellor Wolfgang Schuessel said the euro’s rise was “becoming a considerable burden for some companies.”

German Economics and Labor Minister Wolfgang Clement and French Finance Minister Francis Mer last week said the European currency’s gain should be discussed at a meeting next month of Group of 7 finance ministers. European Central Bank council member Klaus Liebscher told Financial Times Deutschland that exchange rates shouldn’t be seen as “a one-way street.”

“This change of stance will have some novelty value,” said Ian Gunner, head of foreign exchange in London at Mellon Financial Corp. “We’ve seen the highs for euro-dollar for at least the next month.”

For the first time since November, traders and investors favored the dollar against the euro, with 71% of the 48 strategists polled Friday from Tokyo to New York advising buying or holding the U.S. currency. Sixty-five percent advised buying or holding the dollar versus the yen.

Japanese authorities are trying to prevent the yen’s appreciation from eroding demand for products sold by Japanese companies abroad.