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Dollar retakes ¥84 on heels of poll

JIJI

The dollar retook ¥84 in Tokyo Monday for the first time in nine months, attracting strong purchases after the Liberal Democratic Party won a landslide in Sunday’s general election.

At 5 p.m., the dollar was quoted at ¥84.00-02, up from ¥83.66-67 at the same time Friday. The euro stood at $1.3155-3157, up from $1.3110-3111, and at ¥110.52-54, up from ¥109.68-70.

The U.S. currency held firm around ¥84 throughout the morning Monday after hitting a 20-month high of ¥84.48 in the Oceanian market in the early morning, traders said.

The LDP, together with its ally, New Komeito, secured two-thirds of the seats in the House of Representatives in the election, beating expectations among many market players, a major Japanese bank official said.

Participants sold yen for dollars on speculation that the incoming LDP-led government will apply strong pressure on the Bank of Japan to take drastic monetary-easing steps, traders said.

“Now that the dollar has written a high since mid-March (above ¥84), the psychologically important threshold of ¥85 is in sight,” said an analyst at a foreign exchange margin trading service firm.

“The yen is likely to remain weak at least until the BOJ’s next monetary policy meeting on Wednesday and Thursday,” the analyst said.

In Tokyo, the greenback saw some of its gains versus the yen trimmed by “selling to take profits by overseas speculators,” said an official at a major foreign bank.

But the dollar drew buying on dips at levels above ¥83.50, a major Japanese bank analyst said, adding that many players remain bearish on the yen.

The dollar-yen rates reacted little to a news conference in the afternoon by LDP President Shinzo Abe, who is expected to become the next prime minister.

The BOJ should make its own decision at the next policy meeting, bearing in mind the election results, Abe said, stopping short of making concrete requests on monetary policy.

Abe has become “less radical,” considering he called for “unlimited” monetary policy easing just before the election, an official at a foreign-linked financial institution said.