NEW YORK, April 23: The dollar fell to a one-month low against the Japanese yen on Friday amid growing speculation that China could soon revalue the yuan, a move expected to lift other Asian currencies. The Japanese yen has been bolstered since Thursday by comments from Federal Reserve chief Alan Greenspan, who joined a chorus of US officials calling for China to relax its currency’s peg to the dollar.

The theme of yesterday carried over to today: Greenspan’s China talk, said Ronald Simpson, managing director of global currency analysis, Action Economics LLC, New York.

The dollar dipped against the Swiss franc in late trade as US stocks dropped after the Wall Street Journal reported on its Web site that the US has warned China that North Korea could be preparing for a nuclear-weapons test.

On that report, the dollar fell, bonds rose and stocks fell out of bed, Simpson said.

The dollar hit a one-month low of 105.76 yen according to Reuters data, the biggest one-day percentage drop in two months, before trading at 105.99 late in New York, down 0.8 per cent from late Thursday.

The euro fell to a three-week low against the yen around 138.12 yen, its biggest one day fall in a month.

The yen also got a lift from Japanese Prime Minister Junichiro Koizumi’s apology for Japan’s World War Two atrocities. He said he would meet his Chinese counterpart in a bid to repair ties that are at their worst in more than three decades.

China is the topic of the day with speculation they will revalue sooner rather than later, said Bill Hoerter, chief dealer at Alaron Foreign Exchange in Chicago. Koizumi probably helped take a little of the bitter taste out, which also aided the yen.

Any revaluation of the Chinese yuan which is pegged in a narrow band around 8.28 yuan per dollar — and undervalued, according to most analysts —would likely boost currencies of China’s Asian trading partners, including Japan.

Some investors said the rally in yen following Greenspan’s comments may be too far, too fast given that China has not indicated it is willing to act simply at the behest of other nations.

A move by China is unlikely to happen before the fourth quarter at the earliest, BNP Paribas said in research note.—Reuters