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Dollar slips on profit-taking after Japan PM election win

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(Globalpost/GlobalPost)

The dollar weakened against the yen in Asia on Monday as investors locked in profits following the Japanese prime minister's widely expected victory in weekend parliamentary polls.

The greenback was changing hands at 100.01 yen in Tokyo morning trade, down from 100.50 yen in New York Friday afternoon.

The euro bought 131.52 yen and $1.3155, mixed from 132.08 yen and $1.3142 in US trade.

Traders sold the greenback after the unit had jumped on US Federal Reserve chief Ben Bernanke's congressional comments last week, which suggested the Fed had no preset plans to wind down its massive stimulus programme, known as quantitative easing.

Now that Prime Minister Shinzo Abe's projected victory was assured with few surprises, investors adjusted their dollar bets, dealers said.

"The yen, which was sold a bit previously, is now getting stronger as investors are going for profit taking as the initial reaction to Japan's upper house election," said Tsunemasa Tsukada, chief manager of forex trading at Mitsubishi UFJ Trust and Banking Corp.

But Tsukada added that the yen's downward trend was likely to continue.

The unit's sharp decline since late last year has been driven by Abe's economy-boosting plan, dubbed "Abenomics", that has seen promises of big government spending while the central bank unleashed a torrent of easy money in a bid to stoke the world's third-largest economy.

Sunday's upper house election victory gives the conservative leader the legislative muscle to press on with his scheme, which is expected to include some unpopular reforms to the economy.

Abe's weekend win means both chambers will be under government control, unblocking the bottleneck that has hampered legislation for the last six short-term premiers.

Dealers said forex markets were also digesting an announcement by China's central bank that it was lifting controls on loan interest rates, which took effect Saturday, while a G20 meeting wrapped up with an agreement to prioritise boosting growth and jobs and for now to pay less attention to reducing swollen budget deficits.

Tokyo's benchmark Nikkei 225 stock index was up 0.20 percent in late morning trade.

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http://www.globalpost.com/dispatch/news/afp/130721/dollar-slips-profit-taking-after-japan-pm-election-win