TOKYO, Dec 20: The dollar firmed against the yen but was off its highs due to late profit-taking in Tokyo on Thursday after failing to break through resistance at the upper 128-yen levels, dealers said.

The greenback traded at 128.15-18 yen after hitting 128.80 yen at midday, its highest level since October 7, 1998. It compareed with 127.97-128.00 yen in New York and 128.12-15 yen in Tokyo late Wednesday.

Some participants took profits on the dollar’s earlier gains while trading remained thin ahead of Christmas, said Chase Manhattan foreign exchange analyst Minori Takeuchi.

There was no particular news. The market was searching for direction while wondering whether to continue buying the dollar or take profits, she said.

Daiwa Bank dealer Nobuki Kawashima said he expected the dollar to reach the 129.00 level against the yen before the end of the year.

Recently, the dollar has tended to rise against the yen while trading volume is thin. It is possible that the dollar will reach the 129.00 level amid thin Christmas trading, he said.

Earlier the dollar rose on a remark by finance ministry senior deputy director-general Zembei Mizoguchi that it would be undesirable for the yen to rise against the dollar.

Given Japan’s economic fundamentals, there were no grounds to justify an advance in the yen against the dollar, Mizoguchi said.

We will closely watch the market moves (and) we maintain our stance that we will take appropriate action if the forex market shows signs of wild fluctuation, Mizoguchi said.

The euro bought $0.8982-85 against $0.9005-08 in New York and 0.9016-19 in Tokyo late Wednesday.

Against the yen, the euro was quoted compared with 115.15 in New York and 115.54 in Tokyo Wednesday afternoon.

The euro’s fall against the dollar was mainly due to the yen’s weakness against the dollar, a dealer with BNP Paribas in Singapore said.

After the yen breached the 128.50 technical resistance level against the dollar, the euro followed suit to be under pressure.

He forecast the euro to trade between $0.8950 and 0.9050 in the near term.

A meeting of the European Central Bank Thursday was unlikely to have any impact as the market expects no changes in interest rates, the dealer said.

A decision by the Bank of Japan Wednesday to ease monetary policy had virtually no effect as the move was seen as token gesture to satisfy the bank’s critics, dealers said.

Further turmoil in Argentina, including the imposition of a state of emergency and expectations of outright default, failed to rock major currencies either, as the trouble has been brewing for a long time, they said.

In late Singapore trade, the dollar was at 1,300.25 South Korean won, up from 1,292.25 on Wednesday, 34.7615 Taiwan dollars from 34.7385 and 43.87 Thai baht from 43.83.

The greenback fell to 10,112.50 Indonesian rupiah from 10,125, 51.045 Philippine pesos from 51.38 and 1.8352.—AFP