Tokyo - The yen rallied in Asia on Friday, rebounding from the previous day's losses fuelled by a report that Japan would cut corporate taxes to offset the impact of an expected hike in sales tax.
In Tokyo midday trade, the dollar bought 98.72 yen, compared with 98.94 yen late in New York and well below the levels above 99 yen in Asia on Thursday.
The euro slipped to 133.10 yen from 133.48 yen, and to $1.3483 from $1.3488.
Japan's Kyodo news agency said on Thursday that Tokyo was considering the business tax cut to allay fears that the flagged rise in the sales levy - to 8.0 percent from 5.0 percent - would hurt the country's economic revival.
That boosted confidence among traders, who moved out of the safe-haven yen.
However, on Friday Finance Minister Taro Aso threw into question a timeline for any business tax cuts, which he described as a “long-term issue”.
The dollar received a measure of support in New York from data showing an unexpected improvement in weekly figures for US initial claims for unemployment insurance.
However, investors are on edge over a budget stand-off on Capitol Hill that, if no resolved by midnight Monday, could see some parts of the federal government shut down.
Data released on Friday showing Japanese inflation hit a five-year high last month had little impact on currency markets, dealers said. - AFP