Dollar hits highest against yen since mid 2010

TOKYO: The dollar on Friday hit its highest against the yen for more than two years, as yen-selling sentiment remained strong after Japan's new prime minister vowed to push for aggressive monetary easing.

In midday Asian trade the greenback was at 87.63 yen, the highest level since July 2010, compared with 87.19 yen late Thursday in New York.

The euro bought $1.3026 against $1.3052, while the single currency was also at 114.21 yen from 113.80 yen.

The yen-selling pressure continued as Tokyo market participants fully returned to trading, following the closure of Japanese markets from the end of 2012 until Thursday for New Year holidays.

The dollar has climbed since the US Congress struck a last-minute fiscal deal earlier this week to avoid most of the punishing tax hikes that could have jolted the tepid economy back into recession.

"The upward trend is clear," Kengo Suzuki, forex strategist at Mizuho Securities, told Dow Jones Newswires.

"Speculators remain keen to sell the Japanese yen while commercial players are sidelined," Suzuki said. "The market will likely search for how far the Japanese yen will be able to fall."

The Japanese currency has been on the decline since Prime Minister Shinzo Abe, who took office late December, stepped up pressure on the central bank to take bold easing steps.

Abe threatened to change a law guaranteeing the central bank's independence if it did not agree to set a two-percent inflation target, in a bid to drag Japan out of deflation that has haunted its economy for years.