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Forex

Dollar drops to upper 122 yen zone amid lack of U.S. rate hike hints

TOKYO (Kyodo) -- The U.S. dollar fell to the upper 122 yen range on Thursday in Tokyo amid a lack of clear signals from the U.S. central bank as to when it will start raising interest rates.

     At 5 p.m., the dollar fetched 122.85-86 yen compared with 123.38-48 yen in New York and 123.64-66 yen in Tokyo at 5 p.m. Wednesday. It moved between 122.79 yen and 123.61 yen during the day, changing hands most frequently at 123.25 yen.

     The euro was quoted at $1.1379-1380 and 139.79-83 yen against $1.1332-1342 and 139.86-96 yen in New York and $1.1270-1271 and 139.35-39 yen in Tokyo late Wednesday afternoon.

     The dollar traded weak against the yen, continuing the tone in New York overnight after the U.S. Federal Reserve indicated following a two-day policy meeting that a rate hike is likely later this year, but gave no hints as to exactly when, dealers said.

     Kengo Suzuki, chief foreign exchange strategist at Mizuho Securities Co., said the currency market was disappointed by the results amid growing expectations for a September rate hike due to recent upbeat economic data in the world's biggest economy.

     In the afternoon, the dollar sank below the 123 yen line as the Nikkei stock index lost more than 200 points, leaving participants risk-averse and adding demand for the yen, deemed as a relatively safe asset, said Yuji Kameoka, chief foreign exchange analyst at Daiwa Securities Co.

     But the U.S. currency's downside was supported by expectations that the Fed will start its exit from the ultraeasy monetary policy sometime within the year, Kameoka said.

     The euro gained ground amid the dollar's weakness. But market participants were reluctant to bet aggressively ahead of a meeting of European finance ministers later in the day regarding Greece's bailout funds, Mizuho's Suzuki said.

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