By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The dollar gave back its overnight gains against the yen in Asian trading Tuesday, although it rose against its European counterpart.
Against the yen (USDYEN 81.8900, -0.2000, -0.2436%) the dollar was buying ¥81.92 ,down from ¥82.18 in late North American trading Monday. The dollar fell to a fresh 15-year low near ¥81.37 on the EBS trading platform on Monday, traders said. See more tools and data on currency trading.
The yen “traded on a firmer footing as equity markets fell sharply amid fears that China could move to cool its economy from overheating following yesterday’s move to increase the reserve requirement for six large commercial banks,” said analysts at Action Economics.
China reportedly raised the amount of funds that banks must set aside as reserves by half a percentage point on Monday. Read more on China reserves requirement.
Such tightening fears offset the possibility that Japanese authorities would act to stem yen strength, a pledge reiterated by Japan’s top financial official Tuesday.
Japan’s Finance Minister ^oshihiko Noda said at his first press conference since returning from the weekend’s Group of Seven nations’ meeting of finance ministers and central bank officials that Japan would take “decisive” action if necessary, including currency market intervention, to stem the yen’s rise.
“I explained to the G-7 that Japan’s previous intervention was aimed at curbing excessive appreciation in the yen that could hurt the Japanese economy,” Noda said, according to Dow Jones Newswires. “G-7 members reconfirmed that volatile foreign-exchange market moves have a negative impact on the economy and financial markets.”
“We expect actual intervention” if the dollar were to fall to low 81-yen levels,” said Dariusz Kowalczyk, senior economist and strategist for Credit Agricole CIB, in emailed comments.
Much depends on the text of Federal Open Market Committee minutes, due out in New ^ork trading hours, he said.
Any hint that another U.S. round of quantitative easing “may be delayed or that its size would be smaller than had been priced in would boost the [U.S. dollar] and weigh on global equities and emerging market assets,” he said.
The dollar index (DXY 77.62, +0.18, +0.23%) , a measure of the U.S. unit against a basket of six major currencies, rose to 77.531 from 77.513 late Monday.
The euro (EURUSD 1.3841, -0.0033, -0.2379%) slipped to $1.3864 from $1.3880 late Monday, and the British pound (GBPUSD 1.5877, +0.0001, +0.0063%) rose to $1.5897 from $1.5877.
