Dollar rises close to 109 yen on weak Japan prices, stock gains

The U.S. dollar rose near to the 109 yen line Monday morning in Tokyo, as a rebound in Tokyo stocks helped revive investors' risk appetite while disappointing Japanese price data boosted expectations of additional monetary easing by the Bank of Japan.

At noon, the dollar fetched 108.95-99 yen compared with 108.60-70 yen in New York and 108.78-80 yen in Tokyo at 5 p.m. Friday.

The euro was quoted at $1.1306-1306 and 123.21-23 yen against $1.1305-1315 and 122.71-81 yen in New York and $1.1343-1345 and 123.39-43 yen in Tokyo late Friday afternoon.

The dollar edged higher almost throughout the morning as the key Nikkei stock index soon recouped its opening loss and made a solid rebound, spurring risk appetite. The yen was subsequently sold against the dollar as its allure as a safe-haven asset decreased, dealers said.

Weak Japanese wholesale prices data in April dealt another blow to the yen, increasing market expectations that the BOJ will implement additional stimulus measures in the foreseeable future, they added.

A BOJ report showed in the morning that the index of corporate goods prices dropped 4.2 percent in April from a year earlier, falling at the fastest pace in more than six years, weighed down by continued year-on-year declines in crude oil prices.

"With the price data turning out so bad, it's natural that speculation grows that the BOJ will need to work harder to meet its 2 percent inflation target," said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

He added that positive U.S. retail sales and consumer sentiment data released Friday also lent support to the dollar, but its upward momentum was not so strong following U.S. Treasury Secretary Jack Lew's remarks that it is important for Group of Seven economies to reaffirm pledges to refrain from competitive currency devaluations at their meeting later this week.

His remarks were taken as a check against Japanese currency intervention to stem the yen's rapid rise. Japanese Finance Minister Taro Aso has said repeatedly Japan is ready to step in if necessary.

The euro rose to the 123 yen range, reflecting the yen's broad weakness, while the single European currency stayed virtually flat against the dollar.

==Kyodo

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