TOKYO, May 7: The dollar bounced back against the yen in late trading here Tuesday on short covering after comments by Japanese officials on possible intervention, dealers said.

The greenback stood at 127.37-40 yen recovering from the day’s low of 126.76 yen, compared with 127.15-18 in New York and 127.34 in Singapore late Monday.

Markets in Japan were closed on Friday and Monday for public holidays.

There were rumours about official intervention and the failure of a major life insurer. They sparked off short covering by dealers, as they had been dumping dollars on the prospect of further declines, said UFJ Holdings dealer Masato Imai.

The dollar remained weak in earlier trading due to growing concerns over the fragile US economic recovery and selling from Japanese exporters, dealers said.

But Finance Minister Masajuro Shiokawa said he was watching the foreign exchange market with special interest while his deputy, Haruhiko Kuroda, said authorities were ready to take “appropriate action” in the market if needed.

Intervention comments by Japanese officials have turned stronger today, Aozora Bank deputy forex manager Kazuhiro Nishina said.

The euro bought $0.9157-60 compared with 0.9180-83 in New York and 0.9148 in Singapore late Monday.

Against the yen, the euro was quoted at 116.60, against 116.71 in New York and 116.49 in Singapore late Monday.

In Singapore, a dealer with BNP Paribas said the market was anticipating the Fed would continue with its low interest rate regime, so speculation was not affecting euro-dollar trade.

The impact would be more if the Fed raises rates, but I don’t think there’s any reason for higher rates at this time, he said.

The euro is going up because of the dollar weakness, not the strength of the euro itself, he said, noting the other currencies were also gaining against the greenback.

In late Singapore trading, the dollar fell to 1.8022 Singapore dollars from 1.8038 on Monday, 9,265 Indonesian rupiah from 9,278, 49.59 Philippine pesos from 49.80, 42.83 Thai baht from 42.91, and 1,278.9 South Korean won from 1,280.08.

It rose to 34.558 Taiwan dollars from 34.547.—AFP