Forex

The dollar rose against the yen on Thursday on what traders suspect is yen-selling intervention by Japanese authorities.

The greenback strengthened to as high as 111.30 yen after earlier falling to within a half percent of Tuesday's three-year low of 110.10.

It is trading at 110.92 near midday.

Traders are factoring in Wednesday's upbeat tankan business survey from the Bank of Japan and a resumption of a bull run in the Nikkei share price average.

"Although the authorities say they are not looking at a specific exchange rate level, I think they are worried about what would happen if they allowed the dollar to fall below 110," said Mitsuo Imaizumi, deputy general manager of the bonds and forex department at Daiwa Securities SMBC.

"If they pushed up the dollar aggressively, it could raise eyebrows of their overseas counterparts, so they seem to be just supporting the dollar around that level."

The Nihon Keizai Shimbun financial daily reported that Japan's Ministry of Finance was considering expanding the borrowing limit for its foreign exchange account -- the war chest for its yen-selling intervention -- by up to 20 trillion yen ($180.7 billion) from 79 trillion yen currently.

Japan conducted a record 13.5 trillion yen of yen-selling intervention in the first nine months of this year, leaving about 12 trillion yen or so under the current ceiling. The MOF wanted to act before a dwindling war chest invites speculators to step up their yen buying, the newspaper said.

Without intervention, the yen would likely face strong upward pressure in the near term due to Japan's current account surplus, capital flows and other factors, Imaizumi added.

The Nikkei has begun the new quarter on a strong note, finishing the morning session Thursday 1.25 percet higher to add to Wednesday's gains.

Despite a two-percent rally in the Dow Jones industrial average on Wednesday, traders said worries about the U.S. economy -- particularly about the soft labor market and its eventual impact on personal consumption -- weighed on the dollar.

Elsewhere in the region, the Australian dollar is continuing to strengthen against the greenback, reaching a new five-and-a-half-year high of 68.78 U.S. cents in New York trade late Wednesday.