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. Last Updated: 07/27/2016

Dollar Soars Against Yen on Share Repatriation Forecasts

TOKYO -- The dollar hit a three-week high against the yen in Asia on Monday, riding high on chances that U.S. operators will keep selling Japanese shares and take the funds home.

While the dollar's 3 percent gain against the yen in the last few days raised bulls' expectations for it to rise further, some dealers remained pessimistic about the currency considering the battering it has taken for most of the past four months.

The dollar rose as high as 119.29 yen, its highest since July 8. As of 0515 GMT it stood at 119.24/27 yen against Friday's late New York level of 118.78/88 yen.

Although Japanese share prices rose a little on Monday, the greenback was supported largely by chances of more foreign repatriation from Japanese share markets -- the main driving force of its recent gains.

"Market sentiment has changed. People started to realize they had nowhere to park their funds after they had sold dollar," said Yasunari Ueno, chief market economist at Mizuho Securities.

"Its rise to 120 yen is almost certain," Ueno said.

Noriyuki Kato, head of foreign exchange at ING in Tokyo, was also bullish on the dollar's short-term outlook. "I think there may be a temporary rise to around 120 or 121 yen. There was some selling by exporters but most have stepped out to see how much it will rise."

Others remained skeptical, saying the dollar's fundamental weakness -- worries about the yawning current account deficit and the negative impact of recent tumbles in share prices on consumption -- were still unsolved.

"The dollar has been sold because there were worries about the U.S. current account deficit. Accounting problems simply exacerbated those worries," said Tomomasa Noguchi, a foreign exchange manager at Mitsubishi Corp.

"Some say the dollar has to be devalued by 25 percent to erase the current account deficit. It's true markets do not necessarily go to a level that economic theories indicate, but I'm not sure if the dollar has won back the confidence it had lost," Noguchi added.