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. Last Updated: 07/27/2016

Yen Reverses Losses, Scorns Intervention

LONDON -- The yen erased losses inflicted by repeated Bank of Japan intervention Monday and was seen setting new highs against the dollar and the euro with traders' keen to test central bankers' resolve.

Japanese Finance Minister Kiichi Miyazawa confirmed earlier in the day that the BOJ intervened during Asian trading to buy dollars against yen for the first time in over two months.

But despite several BOJ attempts to lift the dollar every time it approached 103 yen, the U.S currency was pushed back to session lows as comments by European central bankers led the market to think that the BOJ would be left alone in its decision to use market intervention to smooth disruptive currency moves.

"Dollar/yen has come off despite one or two threats coming out of Japan," said a London-based U.S. bank dealer.

"But until we see the color of their money in Europe, the market will still try to head where it wants to head."

The dollar was within a yen of four-year lows around 101.25 set Friday having backed off an Asian high above 104. Euro/yen was less than a yen above its life low of 102.41 set Friday.

Meanwhile the euro was within half a cent of its $1.0073 life low set Friday and still within reach of parity against the dollar.

The euro had started to falter early in Europe after Bundesbank council member Klaus-Dieter K?hbacher said it could test parity with the dollar Monday and eased further after European Central Bank council member Klaus Liebscher was quoted as saying he was "not a great supporter" of intervention.