Dollar drops on falling US bond yields

The greenback dropped to 81.45 yen in Tokyo afternoon trading, off an intraday low of 81.26, but down from 81.62 yen in New York late Wednesday.

The euro rose to $1.3233 from $1.3224 in New York.

Against the yen, the single European currency fell to 107.78 yen from 107.88 yen in New York.

Amid thin holiday trade the yen has climbed back towards the 15-year high of 80.21 yen it marked in early November, prompting Tokyo officials to reiterate their readiness to intervene in the market.

A strong yen makes Japan's exports less competitive abroad and eats into companies' repatriated profits. The currency's latest gains helped drive down exporters' shares on the Tokyo stock exchange Thursday.

The forex market took a cue from falls in US long-term bond yields overnight, dealers said, with trading extremely light near the year-end.

Lower US bond yields make the dollar less attractive for investors seeking higher returns.

"US yields are seen to remain a driving factor behind moves in the Tokyo market, with fewer market participants for the rest of the day," said Yuichiro Harada, dealer at Mizuho Corporate Bank.

The market also awaited the release later in the day of US initial jobless claims, ahead of a crucial US payrolls report on January 7, dealers said.

"The market is closely watching any signs concerning whether there would be a change in the weak US employment situation and on how bad weather has influenced the year-end shopping season," Harada said, referring to heavy snowstorms that have hit the northeastern United States.

The dollar was lower against other Asian currencies. It fell to 1.2915 Singapore dollars from 1.2977 on Wednesday and to 43.79 Philippine pesos from 43.91.

The greenback also sagged to 29.21 Taiwan dollars from 29.41, to 8,980.75 Indonesian rupiah from 9,011.50 and to 30.14 Thai baht from 30.17.