TOKYO, Nov 8: The dollar fell back against the yen here on Thursday in late technical trading after gaining ground on concern over the health of Japanese banks, dealers said.

The greenback stood at 120.72-74 yen after touching a high of 121.38 yen, against 120.99 yen in New York and 121.09-11 yen in Tokyo late Wednesday.

Trading was volatile today as speculative players sold back dollars in technical moves after the US unit approached their near-term target of 121.50-60 yen, said Daiwa Bank dealer Susumu Tsuda.

But they find it hard to let the dollar go down further as large-scale interventions can be expected, he added.

Sanwa Bank dealer Naoya Murata said the dollar came under strictly technical selling in the afternoon, mostly in interbank deals with some foreign investors taking part.

In early trading, the dollar steadily climbed as falling share prices of Japanese banks worried investors.

The focus is on the equity market as Japanese bank shares have tumbled in the past two days, said HSBC foreign exchange manager Takeda Uda.

Shares in middle-sized Japanese lender Asahi Bank Ltd. plummeted on mounting concerns over bad loans held by the sector, forcing the ailing bank’s president to try and calm market fears.

Its shares closed down 11 yen or 9.7 per cent at 102 yen off an intraday low of 76 yen. The fall contrasted sharply with the Nikkei-225 average of the Tokyo Stock Exchange, which ended up 1.4 per cent or 146.81 points at 10,431.79.

Meanwhile, the euro bought $0.8972-74 compared with $0.8976 in New York and $0.9025-27 in Tokyo late Wednesday.

Against the yen, the euro was quoted at 108.33, against 108.54 in New York and 109.35 in Tokyo Wednesday afternoon.

A 25-basis point interest rate cut by the European Central Bank (ECB) widely expected to be announced later in the day offered no incentive to buy the euro, dealers said.

Dollar-euro trading was very quite ahead of the ECB meeting, said Sanwa’s Murata.

Many do not expect a reaction even if it is a 25-basis point cut by the ECB, said Uda from HSBC.

Dealers in Singapore said, however, the euro was likely to fall further against the dollar if the ECB cut interest rates.

It’s all about psychology now. You have the US so aggressive in rate cuts but on the other hand, the ECB is very reluctant to cut rates, said a dealer at BNP Paribas.

Moreover, the euro is expected to be undermined by growing fears the euro zone will follow the United States into recession as the September 11, attacks on New York and Washington take their toll on consumer and business confidence, Tokyo dealers said.

Overall market activity was quiet ahead of a long weekend in the US, said Uda from HSBC.

In late Singapore trade, the US dollar fell to 51.85 Philippine pesos from 51.90, 44.50 Thai baht from 44.64, 10,580 Indonesian rupiah from 10,645, 1.8167 Singapore dollars from 1.8183, 34.455 Taiwan dollars from 34.519, and 1,285.2 South Korean won from 1,292.4.—AFP