Dollar stays weak as Japan tries to talk down yen

TOKYO: The dollar remained weak in Tokyo trading hours Tuesday amid expectations of further easing in the United States, as worries over the health of the world's biggest economy continue, analysts said.

However, speculation over another round of possible Japanese market intervention to weaken the yen and prop up the greenback capped losses for the US unit, they said.

The dollar stood at 82.07 yen in morning trade in Tokyo, flat from 82.05 yen in New York Monday after plunging to a new 15-year-low of 81.39 when the Tokyo market was closed for a national holiday.

The euro was at 1.3867 dollars from 1.3876 in New York Monday and 114.04 yen from 114.55 yen.

Market observers believe that the dollar could drop further on expectations that the US Federal Reserve could take further easing steps next month, complicating any efforts by Japanese authorities to weaken the yen.

Japanese Finance Minister Yoshihiko Noda, fresh from a weekend meeting with fellow financial chiefs of the Group of Seven nations, reiterated that Tokyo would take "decisive" action if necessary to steady the rise of the yen.

"There is going to be a tug of war between the dollar's weakness (vs the yen) and wariness about further Japan intervention (in the currency market)," Mizuho Securities equity strategist Tsuyoshi Segawa told Dow Jones Newswires.

Japan stepped into the currency markets on September 15 for the first time since 2004 to weaken the yen and help safeguard a fragile economic recovery.

A strong yen harms Japanese exporters by making their products more expensive and eroding the value of their overseas earnings when repatriated.