* Yen hovers near 20-month low versus dollar
* Japan's next PM Abe heaps keeps up pressure on BOJ
* Dollar index stays above 2-month low set last Wednesday
* Disarray in US budget talks seen supporting dollar
By Masayuki Kitano
SINGAPORE, Dec 24 The yen dipped and neared a
20-month low versus the dollar on Monday after incoming premier
Shinzo Abe renewed pressure on the Bank of Japan to adopt a 2
percent inflation target.
The yen, which rose on Friday on position-squaring, came
back under pressure after Abe said on Japanese television on
Sunday that he will try to revise a law guaranteeing the BOJ's
independence if his demand for a binding inflation target is not
The dollar rose 0.2 percent against the yen to 84.44 yen
. That was close to a high of 84.62 yen that had been set
last Wednesday, the greenback's strongest level against the
Japanese currency since April 2011.
Abe, who is set to become prime minister on Wednesday after
his opposition Liberal Democratic Party (LDP) won this month's
lower house election, has put the BOJ at the centre of political
debate, urging bolder monetary stimulus to beat deflation.
The greenback was broadly higher after negotiations to
prevent a U.S. fiscal crunch hit an impasse last week, denting
investors' appetite for risky assets.
"It looks like all momentum for the fiscal cliff
negotiations is gone," said Rob Ryan, strategist for RBS in
While the dollar could get pushed around by year-end flows
over the next several days, it will probably stay firm in the
near term, he added.
"On balance I would see a stronger U.S. dollar into the end
of the year," Ryan said.
Some U.S. lawmakers voiced concern on Sunday that the
country would go over "the fiscal cliff" in nine days,
triggering harsh spending cuts and tax hikes, which economists
say could push the U.S. economy back into recession.
The dollar had surged on Friday after a budget plan proposed
by the Republican speaker of the U.S. House of Representatives,
John Boehner, failed to win support from his own party. That had
deepened worries that U.S. lawmakers might not reach a deal to
avoid the fiscal cliff by year-end.
The dollar index, which measures the greenback's value
against a basket of major currencies, inched up about 0.1
percent to 79.670, and stayed above a two-month low of
79.008 set last Wednesday.
The euro dipped 0.1 percent versus the dollar to $1.3172
, inching away from an eight-month high of $1.33085 hit