LONDON: The yen rose from a 4-1/2-year low against the dollar on Monday after Japan's economy minister suggested the country's currency might have weakened enough, leading some investors to cut hefty bets against it.
The dollar fell 0.6 percent to 102.55 yen, having slid about 1 percent to 102 in the Asian session. The euro lost 0.5 percent to 131.85 yen after plumbing 131.045. Last Friday, the dollar reached a 4-1/2-year high of 103.32 yen, while the euro hovered near a 3-1/2-year peak of 132.78 yen.
But analysts said any sharp dip in the dollar against the yen was a buying opportunity even after Economy Minister Akira Amari said the yen's excessive strength has largely corrected and further weakness could damage Japan's economy.
The Bank of Japan holds a policy meeting on Tuesday and Wednesday.
"Dollar/yen had overshot both from a technical as well as from the extreme short positioning that had seen against the yen," said Alvin Tan, currency strategist at Societe Generale.
"But any dip in dollar/yen towards 101 or 102 yen is a buy as Japanese policymakers are clear that there will be more asset purchase or quantitative easing in the longer term."
Tan said momentum indicators like the 14-day relative strength index showed the dollar was in overbought territory against the yen and hence a pullback was due.
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