TOKYO: The dollar weakened against the yen on Monday as demand for the safe haven Japanese currency grew on declines in world equities and oil prices.
The initial rally in the dollar against its major rivals that came after the Federal Reserve's interest rate hike has faded as dealers focus back on the struggling global economy.
"As global stocks are facing selling pressure again and oil prices remain stagnant, investors tend to buy the yen as a risk-off option," said Yosuke Hosokawa, head of the FX sales team at Sumitomo Mitsui Trust Bank.
The Japanese unit is often seen as a secure investment target in time of volatility and uncertainty.
Japan's central bank on Friday tweaked its stimulus but crucially left its vast 80 trillion yen annual asset-buying programme unchanged. The announcement saw an initial spike in the dollar against the yen but it soon retreated.
The dollar changed hands at 121.24 yen, compared with 121.26 yen in New York Friday. It is also well off the levels above 123 yen seen soon after the Fed rate hike.
The euro was at $1.0868 and 131.82 yen against $1.0870 and 131.80 yen in US trade.
The greenback was mixed against emerging units.
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