"The feeling is that we are beginning to see fiscal
year-end repatriation flows for Japan. The yen will remain in
favor over the next few weeks as Japanese corporates bring
money back home," said RBC currency strategist Adam Cole, in
London.
Further yen gains could however be limited by speculation
that the Bank of Japan may take additional steps to ease
monetary policy. The BOJ is in the spotlight after the Nikkei
newspaper reported on Friday that the central bank was
examining easing again and may decide on such a move when it
meets on March 16-17.
In early afternoon New York trade, the dollar <JPY=> was
trading down 0.4 percent at 89.92 yen.
The yen was up about 0.5 percent against the Canadian
dollar <JPYCAD=R>, 0.9 percent against the Swiss franc
<JPYCHF=R>, 0.6 percent against the euro <JPYEUR=R> and 1.1
percent against the pound <JPYGBP=R>.
Higher-yielding currencies such as the Australian dollar
also fell against the Japanese currency. Aussie/yen <AUDJPY=R>
slipped 0.2 percent.
DOLLAR GAINS
The dollar index <.DXY>, a non-traded calculation of the
dollar's performance against a basket of currencies, was up 0.2
percent at 80.543.
China, the world's biggest holder of foreign exchange
reserves, renewed its commitment to the U.S. Treasury market on
Tuesday but said it would be wary of substantially boosting its
gold holdings.
"If China is not diversifying their reserves into gold,
then there is no realistic alternative to absorb their demand
outside of U.S. dollars," said Kathy Lien, director of research
at GFT in New York.
The pound was under widespread pressure, dropping to a
one-week low versus the dollar <GBP=> after ratings agency
Fitch said Britain's sovereign credit profile had
deteriorated.
Earlier, a Moody's Investors Service report saying Britain
faces a difficult balancing act in deciding how and when to
reduce support for the banking sector had also weighed on the
pound. [ID:nLDE6271OB]
Against the dollar the pound was down around 0.4 percent at
$1.4992.
The euro was down around 0.2 percent against the dollar
<EUR=> at $1.3579, continuing to struggle in the face of debt
concerns in euro zone countries such as Greece and Portugal.
Fitch Ratings said on Tuesday it still has a negative
outlook on Portugal's AA ratings and was studying the details
of the country's new austerity measures announced a day
earlier.
"Even though Fitch also stated that the contagion risk to
Portugal and Spain from Greece is not great, there are
sufficient worries in the market concerning EMU to keep the
euro 'on the back foot'," said FOREX.com analysts in a note.
Greek Finance Minister George Papaconstantinou said on
Tuesday in Washington the country was taking necessary steps to
get its budgets under control but said the issue was also a
European one. [ID:nWEN1451].
Greece has been a drag on the euro in 2010, which has lost
5 percent against the dollar so far this year and 8.1 percent
against the yen.
(Additional reporting by Neal Armstrong in London; Editing by
Andrea Ricci)
(vivianne.rodrigues@reuters.com ; +1 646 223 6102; Reuters
Messaging: vivianne.rodrigues.reuters.com@reuters.net ))