January 13, 2002	Sunday	Shawwal 28, 1422

NEW YORK, Jan 12: The yen rose against the dollar and euro on Friday after cautious remarks by Japanese officials made traders circumspect about extending the currency’s recent downward spiral.

On Friday, Japanese Trade Minister Takeo Hiranuma said the yen was nearing appropriate levels around 135 per dollar, while Economics Minister Heizo Takenaka said he believed the yen was close to levels justified by economic fundamentals.

Japan is dealing with a deep economic retrenchment and its government is struggling to balance the effects of a weaker yen with its impact on its Asian trading partners. Though Japanese policy makers are seen welcoming a weaker yen, analysts say the pace of the decline is what most concerns them.

They just want to smooth the pace a little bit because the way the market was going it was going to hit 140 next week, said Bernard Tsui, vice president at Union Bank of California. It’s appropriate for officials to say something in order to slow it down.

But analysts said the shift by Japanese officials from a tone of apparent nonchalance did not alter the currency’s downward impetus and many see a 135-140 range as all but certain.

In late US trading, the dollar bought slightly less than 132 yen, down 0.55 per cent from its prior US close and below Wednesday’s 3-year low at 133.37 yen. Versus the euro, the yen traded near 117.70 yen, down 0.40 per cent on the day.

The yen is reflecting some of the concerns expressed by Japanese officials about its rapid rise. With the market already long dollar/yen, it is not surprising that there is some profit-taking, but it is not likely to last very long, said Eric Nickerson, chief currency strategist at Bank of America in New York.

The remarks gave the euro a modest lift against the dollar, which in late dealing traded near 89.20 cents, up modestly from its previous US close.

Earlier, the US Labour Department reported wholesale prices slid for the third month in a row in December, dropping by a more than expected 0.7 per cent. Falling energy prices helped bring it below forecasts of a 0.2 per cent decline.

Takenaka, who is visiting London, said Friday that foreign exchange rates should be left to the market.—Reuters