* Econ min Amari says excessive yen weakness negative for
* Bernanke suggests Fed in no hurry to withdraw stimulus
* Euro buoyed by ECB outlook, receding crisis fear
* Dollar/yen down 0.7 pct, euro/dollar not far from 11-month
* Euro near 13-month high vs Swiss franc, 9-month high vs
By Hideyuki Sano
TOKYO, Jan 15 The yen rebounded from a
2-1/2-year low on Tuesday after Japanese Economics Minister
Akira Amari's remarks that excessive yen weakness could have a
negative impact on the country sparked profit-taking in heavy
bets against the Japanese currency.
The dollar was also weighed down by comments from the head
of the Federal Reserve suggesting the U.S. central bank was in
no hurry to withdraw monetary stimulus from the world's biggest
The dollar dropped about 0.7 percent to 88.95 yen on
the day, having fallen as low as 88.62 point at one point after
Amari said excessive yen weakness could hurt the livelihood of
people by boosting import prices.
"That the yen's weakness has its downside for Japan is
something the market has almost completely ignored until now,"
said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking
"We'll have to see whether Amari was trying to put a brake
on the yen's slide or whether he has a certain desirable range
for the yen in mind, say, like 85-90 yen," Uno added.
The dollar's setback came a day after it rose as high as
89.67 yen, its highest level since June 2010, on expectations
the Bank of Japan will be forced to take bold easing action to
jump-start a sluggish economy.
The BOJ is under unrelenting pressure from newly elected
Prime Minister Shinzo Abe to adopt a 2 percent inflation target
to beat deflation once and for all
While further monetary easing and subsequent weakness in the
yen are likely to help Japanese exporters, there are costs to
the economy as well, such as a rise in the country's import
bills, which could work like a tax hike.
Earlier, the U.S. currency also failed to extend its recent
gains to test the big number of 90 yen as U.S. Fed chief Ben
Bernanke said the recovery was still fragile and warned the
economy was at risk from political gridlock over the deficit.
His comments also came after the president of the San
Francisco Federal Reserve Bank, John Williams, said he expected
the central bank's bond buying would be needed "well into the
second half of 2013."
"Overall, these remarks do not change our view that QE3 will
continue into at least the end of 2013 as the recovery remains
moderate, while we also see downside risks for the economy
stemming from the debt ceiling uncertainty," said Vassili
Serebriakov, strategist at BNP Paribas.
The Fed's stance stood in contrast to a more upbeat European
Central Bank, which recently said the euro zone economy will
recover later in 2013 and there are already signs of
Against this backdrop, the euro was buoyed near an 11-month
high, with receding worries over a full-blown financial crisis
in Europe encouraging investors to shift some funds back to the
The euro last traded at $1.3356, down slightly on the
day but still not far from Monday's high of $1.3404, its highest
level in 11 months. Immediate resistance was seen around
$1.3490, a level that had capped the currency last year.
The single currency outperformed many of its peers over the
last few sessions, hitting a 13-month high against the
safe-haven Swiss franc, in another sign of receding fear over
the euro zone's debt crisis.
The single currency rose as high as 1.23855 franc and last
traded at 1.23470 franc, edging higher even after
Monday's massive 1.2 percent gains.
The euro also held near a nine-month high against the
British pound, last trading at 0.8309 pound after
having risen as high as 0.8326 on Monday.
Against the yen, the euro scaled a fresh 20-month peak of
120.13 on Monday before Amari's comments lifted the
yen from lows. It last stood at 118.83 yen, down 0.2 percent on