Source AP ©

Dollar rises to 4 1/2-year high against the yen, approaching 124 yen

The dollar rose to a new four-and-half year high versus the yen in Asia Friday, nearing the 124-yen mark due to strong demand from Japanese investors.

The dollar was trading at 123.90 yen midafternoon Friday, up from 123.67 yen late Thursday in New York. The euro rose to US$1.3398 from US$1.3387.

Earlier in the session, the greenback advanced as high as 123.97 yen - the highest since December 11, 2002. That compares with 123.66 yen in New York overnight and the previous high for the year to date of 123.76 yen.

Players expect the greenback to continue its climb against the yen next week because of Japanese trust funds' regular buying of dollar-denominated stocks and bonds.

"The volume (of buying) is expected to be huge because June is a bonus month in Japan," said Yuji Saito, head of foreign exchange at Societe Generale. "These orders usually come in toward the end of the month."

Japanese importers are also boosting the dollar, said Kitakura Katsunori, a senior dealer at Chuo Mitsui Trust and Banking.

"They seem to be reluctantly buying the dollar at these very high levels because it isn't falling at all," Kitakura said.

Yet another reason to sell the yen is "recent data from Europe showed the economy there remains strong, fueling players' speculation the European Central Bank is still leaning toward additional rate hikes," said Saburo Matsumoto, a senior dealer at Sumitomo Trust and Banking Co. "As a result, the yen is weakening against the euro, and then the dollar."

The euro was quoted at 166.02 yen midafternoon, near its record high of 166.12 yen and higher than 165.62 yen in New York Thursday.

The dollar was mostly higher against other Asian currencies, rising to 40.702 Indian rupees from 40.565 and to 46.068 Philippine pesos from 46.050. It fell to 32.762 Taiwan dollars from 32.935.