TOKYO: The dollar's rise against the yen took a breather in Asia Monday amid speculation over further monetary easing by the Bank of Japan, which has started a two-day policy meeting.
The dollar bought 81.24 yen in Tokyo trade, slightly down from 81.31 yen in New York late Friday, after it hit 81.59 yen in earlier trade, its highest level in nearly seven months.
The euro bought 103.65 yen against 103.60 yen, while fetching $1.2761 against $1.2741.
Opposition leader Shinzo Abe said last week he would call for "unlimited" central bank easing and vowed to strike a deal with the BoJ over further measures if his Liberal Democratic Party wins next month's general election.
Prime Minister Yoshihiko Noda dissolved the lower house of parliament Friday, with opinion polls suggesting his centre-left Democratic Party of Japan would likely lose to Abe's conservative LDP.
"However there are worries as to whether Mr. Abe and the LDP will be able to follow through on their very aggressive economic policies if they do in fact return to power," Kengo Suzuki, forex strategist at Mizuho Securities, told Dow Jones Newswires.
The dollar was facing a light pull-back Monday due to profit-taking from overseas players, said a senior bank dealer in Tokyo.
The market was cautious amid concerns that overseas investors piling up yen-short positions may unload some of them before the Thanksgiving holiday starting Thursday.
The Bank of Japan started a two-day policy meeting Monday with market players expecting the central bank to stand pat on further stimulus.
Hopes for a deal in the United States to avoid the fiscal cliff of tax hikes and spending cuts also provided support to riskier currencies.
President Barack Obama met congressional leaders from both parties to open talks on taming the country's deficit, with the two sides stressing a willingness to find common ground.
The dollar was mixed against other Asia-Pacific currencies.
It rose to 55.06 Indian rupees from 54.99 rupees on Friday, to Tw$29.15 from Tw$29.11 and to 9,632 Indonesian rupiah from 9,625 rupiah.
The greenback slipped to 1,086.30 South Korean won from 1,090.80 won, to Sg$1.2248 from Sg$1.2278 and to 41.24 Philippine pesos from 41.32 pesos.
It held steady at 30.72 Thai baht.
The Australian dollar rose to $1.0367 from $1.0330, and China's yuan was at 12.99 yen against 13.00 yen.
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