The U.S. dollar is expected to be firm against the yen in Tokyo in the coming week as the Bank of Japan is likely to continue supporting the U.S. currency through market intervention.

Many dealers and market watchers said they expect the dollar to trade between 118.50 yen and 121.50 yen. It traded between 117.11 yen and 119.78 yen in Tokyo in the past week. The Tokyo market was closed on Monday for a national holiday.

“The BOJ will keep on stepping into the market, making players cautious about selling the dollar,” said Masahiro Ishikawa, a currency analyst at Bank One in Tokyo.

The Japanese central bank has repeatedly intervened in the market since Sept. 17, when the dollar dropped to the 116 yen level in Tokyo following the Sept. 11 terrorist attacks in the United States.

On Thursday, the BOJ, the Federal Reserve Bank of New York and the European Central Bank made their first concerted dollar-boosting effort, intervening in Tokyo, London and New York, and temporarily lifting the U.S. currency to 120.05 yen in New York.

The BOJ stepped into the Tokyo market on Friday when the dollar fell to the 118 yen level. The 5 p.m. quote in Tokyo on Friday was 119.27-30 yen.

Finance Minister Masajuro Shiokawa has said that a financial meeting of the Group of Seven (G7) industrialized countries to be held in Washington on Saturday next week will discuss joint intervention.

In addition to wariness about intervention, some dealers said the dollar could rise against the yen on worries about frail Japanese economic fundamentals.

“The shock from the terrorist attacks has abated a little, and data reminding us of the situation in Japan could lead to yen-selling,” said a dealer at Yasuda Trust & Banking Co.

An important indicator is the BOJ’s Tankan quarterly business sentiment survey for September to be released on Monday, dealers said. Others said, however, that weak Tankan figures have already been discounted.

“We won’t be surprised by dismal Tankan data or other economic data on Japan. It will be the figures for the U.S. that we’ll be more concerned about,” said Minori Takeuchi, a senior market analyst at Chase Manhattan Bank in Tokyo, adding that the market will be paying particular attention to National Association of Purchasing Managers (NAPM) data to be released Monday.

Dealers agreed that while being well-supported against the yen, the dollar will be top-heavy given concerns about U.S. retaliation for the attacks.

“The prospect of war still makes us jittery. There is a strong risk that the dollar will fall once the U.S. takes military action,” said Takayuki Togawa, a foreign exchange manager at Tokai Bank.

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