The dollar, having risen to close to 127 yen in early April, has given up much of its recent gains and is now hovering around 120 yen.
The currency market reacted positively to the inauguration of the reformist Cabinet of Prime Minister Junichiro Koizumi, but the optimism is beginning to run low.
For those who expected the Koizumi administration to press forward with a sweeping restructuring program quickly, recent developments on the political front have been a letdown.