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More Yen and Dollar Strenght?!

The yen rose against the dollar in Asia Monday as Japan's prime minister and top central banker limited their dialogue on foreign-exchange matters to a telephone conversation. This lead investors to think that Tokyo may not take immediate action to tame the yen's recent strength.

Bank of Japan Gov. Masaaki Shirakawa and Prime Minister Naoto Kan on Monday morning discussed recent foreign exchange market movement as well as economic conditions at home and abroad.

A stronger yen is considered negative for the export-reliant economy because it deflates exporters' profits overseas when repatriated.

As a result, the dollar fell to JPY85.35 as of 0050 EDT, down from JPY85.77 in New York Friday.

The euro, meanwhile, was at JPY108.55 and USD1.2718 from JPY108.71 and USD1.2676 last Friday. Investors said the European unit's outlook depends on share price moves. If shares decline, the euro should extend losses against its major rivals.

The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 82.954 from 83.237 Friday.

The British pound extended its decline against the US dollar as concerns of a faltering global economic recovery boosted safe-haven currencies. Despite positive UK retail sales figures, the sterling continued to be pressured by the probability of further austerity measures implemented by the Bank of England.

The Australian dollar traded lower in Asia Monday after the country's general election on the weekend left it unclear who will govern, though the currency gained as the session wore on.

Disclosure: no pos.