LONDON: The yen weakened slightly on Tuesday after an economic adviser to Japan's Prime Minister Shinzo Abe told Reuters that the U.S. dollar at 120 yen is acceptable, a day after comments that were taken to mean the government viewed it as too weak.
The dollar, which was trading at around 119.70 yen before his comments, rose to trade at 119.95 yen, still down 0.1 percent on the day. The euro which had fallen to a two-year low earlier in the European session, recovered to trade at 126.77 yen, broadly flat on the day.
Koichi Hamada, an emeritus professor of economics at Yale University, also told Reuters that "120 yen per dollar is acceptable."
He was quoted on Monday as saying a 105 yen rate was acceptable, but sought on Tuesday to clarify that he had been referring to the purchasing power parity-implied rate, which is around 101 yen, not the spot market rate.
He was also quoted on Monday as having said that the yen's level of around 120 per dollar was very weak.
Hamada's comments come ahead of a visit by Abe to Washington later this month, with negotiations on a trade deal between the U.S. and Japan are at a key stage.
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