The yen rose against the dollar in Tokyo Tuesday morning following a strong improvement in Japan's Tankan survey but gains were capped by modest profit-taking, dealers said.
The Japanese currency was quoted at 108.81 around 2:40 pm (0540 GMT), up from 108.94 to the dollar in New York Monday afternoon. But it was still lower than 108.32 in Tokyo late Monday.
"The Tankan survey was better than market expectations, encouraging investors to buy the yen," said a dealer at Bank of Tokyo-Mitsubishi, adding the yen had reached highs of 108.45 to the dollar during the trading.
In the Bank of Japan's July-September Tankan survey, the index measuring large manufacturers' confidence rose to plus 10, its highest level since June 1997, from plus three in the previous three months.
But the yen quickly slipped back to the 108.70-80-level on profit-taking by European and US funds.
"The yen failed to boost its gains as US and European funds quickly took profits," said Wako Ogawa, a dealer at Fuji Bank.
Investors were also reluctant to take action ahead of the US Federal Open Market Committee meeting later in the day.
Meanwhile, the euro was quoted at $0.8776 around 2:40 pm, down from $0.8792 in New York and $0.8838 in Tokyo Monday afternoon.
"Although there was concern over intervention to prop up the euro, investors found few fresh incentives to buy up the currency," Ogawa said.
Against the yen, the euro was quoted at 95.49 yen, compared with 95.46 yen in New York and 95.74 yen in Tokyo late Monday.
The euro was still receiving some support because of continued fears of intervention by the Group of Seven industrialized nations, dealers in Singapore said.
"Towards $0.8700 and below, the market is always very cautious," said a dealer at BNP Paribas.
Trading was also thin ahead of the FOMC meeting, dealers said. — (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)