TOKYO: The yen weakened in Asia Thursday as traders got a confidence boost on a report that Japan may cut corporate taxes to offset an expected hike in a sales levy.
The dollar bought 98.75 yen in the afternoon -- after briefly topping the 99-yen level at one point late in the morning. The unit fetched 98.46 yen late in New York on Wednesday.
The euro fetched 133.51 yen from 133.18 yen in US trade. The single currency climbed above the 133.90 yen level earlier Thursday, while it bought $1.3524, little changed from $1.3522 in New York.
Japan's Kyodo news agency said Tokyo was considering a cut in the tax rate on firms to allay fears that the flagged rise in the sales levy -- to 8.0 percent from 5.0 percent -- would hurt the country's recent economic revival.
A dealer at a major Japanese bank told AFP that while the news is not new, the key thing is that the government is going to confirm that it is considering lowering business taxes.
The possible corporate tax cut is expected to come in a wider fiscal package that Prime Minister Shinzo Abe is set to unveil next week.
Adding to dollar-buying sentiment was speculation that Japan's national pension fund will move some of its mainly government bond portfolio into other, higher risk assets such as stocks and currencies, dealers said.
The greenback had been under pressure following soft data on US new home sales and durable goods orders. Investors are also keeping an eye on a budget stand-off on Capitol Hill that could see some parts of the federal government shut down if not resolved by midnight Monday.
The unit has suffered some weakness in the past week since the Federal Reserve surprised markets said it would keep its $85 billion a month stimulus programme in place until the economy shows more strength.
A pullback on the bond-buying scheme would tend to push up the dollar's value.
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