Dollar slips on profit-taking after Japan poll

The dollar weakened against the yen in Asia on Monday as investors locked in profits after a comfortable victory for Japan's ruling party in weekend elections.

The greenback was changing hands at 99.95 yen in afternoon trade, down from 100.50 yen in New York late Friday, while the euro bought 131.47 yen and $1.3152, compared with 132.08 yen and $1.3142.

Investors bought up the dollar last week after US Federal Reserve chief Ben Bernanke said the bank's massive stimulus programme would be kept in place until the economy was able to stand on its own.

But after Sunday's upper house victory for Prime Minister Shinzo Abe's party, 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 would likely resume its downward trend against the dollar that started late last year after Abe promised a massive spending and monetary-easing drive to boost the economy.

Abe's win at the weekend gives him full control of both houses of parliament and the legislative muscle to press on with his scheme, which is expected to include some unpopular reforms to the economy.

Dealers said forex markets were also digesting a decision at the weekend by China's central bank to lift controls on loan interest rates, while a G20 meeting wrapped up with an agreement to prioritise economic and jobs growth.

The dollar was also lower against other Asia-Pacific currencies.

It slipped to 59.44 Indian rupees from 59.77 rupees Friday, to Sg$1.2625 from Sg$1.2669 and to Tw$29.90 from Tw$29.94.

It also sank to 30.95 Thai baht from 31.11 baht, to 43.25 Philippine pesos from 43.41 pesos and to 1,118.25 South Korean won from 1,120.79 won.

The Australian dollar rose to 92.13 US cents from 91.84 cents while the Chinese yuan changed hands at 16.26 yen against 16.30 yen.