Graphic: renjith krishnan

The yen resumed its recent weakening trend on Wednesday, giving up early gains, with dealers saying the reversal was largely down to dollar buying among importers.

The greenback bought 87.41 yen in late morning trade in Tokyo, up from 86.97 yen late in New York Tuesday, and from 86.87 yen hours earlier.

The euro bought 114.21 yen, up from 113.75 yen in New York and 113.64 yen in the morning in Tokyo, while the single currency eased to $1.3075 from $1.3079.

A senior dealer at a Japanese bank said the yen's late morning dip was mainly due to dollar-buying rather than any market-moving developments.

“This rise is not news driven, but buying related to foreign investment trust funds for retail investors,” the dealer said.

“This demonstrates that there are still many hoping to buy dollars on dips,” he told Dow Jones Newswires.

Japan's currency has come under selling pressure since the nation's new Prime Minister Shinzo Abe vowed before his successful election last month to push the Bank of Japan for more aggressive monetary easing.

After taking office at the end of December, he repeated that pledge as he centres his first weeks in power on fixing the limp economy.

On Tuesday, the new finance minister said Tokyo would buy bonds issued by Europe's permanent bailout fund to help soothe debt problems in the eurozone - a major Japanese export market - and stabilise the yen.

But London-based Capital Economics said in a note that the bond-buying alone was unlikely to further weaken the yen on its own, because the purchases are being made from existing foreign currency reserves.

“Any impact would therefore have to be indirect, relying instead on Japan's purchases contributing to a general improvement in sentiment towards the eurozone and a reduction in safe haven demand for the yen,” it said.

On Tuesday, fresh data showed eurozone unemployment reached a new record-high of 11.8 percent in November, while retail spending grew less than expected.

The weak data revived speculation that a European Central Bank meeting Thursday could result in more stimulus, and further weaken the euro.

Markets will also be looking to US central banker speeches this week as markets keep a close eye out for Federal Reserve policy moves. - Sapa-AFP