TOKYO (Kyodo) -- The U.S. dollar fell to the mid-120 yen level Tuesday in Tokyo as declines in Asian equities dented traders' risk appetite and recent negative remarks from political figures about additional monetary easing in Japan provided support for the country's currency. At 5 p.m., the dollar fetched 120.47-49 yen compared with 121.05-15 yen in New York and 120.95-97 yen in Tokyo at 5 p.m. Monday. It moved between 120.42 yen and 121.07 yen during the day, changing hands most frequently at 120.77 yen. The euro was quoted at $1.1054-1056 and 133.17-21 yen against $1.1053-1063 and 133.80-90 yen in New York and $1.1040-1042 and 133.53-57 yen in Tokyo late Monday afternoon. The dollar succumbed to selling versus the yen in Tokyo as weaker-than-expected U.S. housing data, released the previous day, reinforced the view that the Federal Open Market Committee, the U.S. Federal Reserve's policy-setting panel, will decide to keep its benchmark interest rate near zero at its two-day meeting starting later in the day, brokers said. Dollar-selling also intensified amid growing expectations that the Bank of Japan will refrain from deciding on fresh stimulus at its monetary policy meeting Friday, based on recent negative remarks about additional easing from key political figures, brokers said. Reuters news service reported that Koichi Hamada, a key economic adviser to Japanese Prime Minister Shinzo Abe, said in an interview Monday that the Japanese central bank can hold off from additional easing as the labor market remains tight. "A large number of market players had already expected that the BOJ would not act this time. The report solidified such a view," said Yuji Kameoka, chief foreign exchange analyst at Daiwa Securities Co. Traders' risk appetite was also hurt after falls in Asian stock markets and a reported rise in tension between the United States and China over the South China Sea, brokers said, explaining increased demand for the yen, deemed as a relatively safe asset. Kameoka said trading was slack ahead of the U.S. and Japanese policy meetings, which could provide major trading cues through possible action and changes in the wording of post-meeting statements. Toru Moritani, chief market economist at Sumitomo Mitsui Banking Corp., said market players moved to "square their dollar-buying positions," given its recent climb to a two-month high in the 121 yen range. "They don't want to face the meetings of the FOMC and the BOJ, with their positions piled up in a certain direction," Moritani added. Amid receding bets on further easing by the BOJ and a risk-off mood, the yen also gained ground versus the euro while the single European currency changed little against the dollar.

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