Dollar hits new high against yen

The dollar climbed to a 2 1/2-month high against the yen in Asia Thursday following the release of Japan's gross domestic product figures, which showed that companies cut back on capital investment last quarter.

The U.S. dollar traded at 120.83 yen by mid-afternoon in Tokyo, up from 120.74 yen late Wednesday in New York. The euro rose to US$1.3526 from US$1.3520.

Japan's gross domestic product in January-March grew at an annual pace of 2.4 percent, slightly weaker than expected. Business investment dropped 0.9 percent.

Following the release of the data, the dollar climbed to 120.88 yen on speculative buying by overseas fund players, from 120.69 yen just before the announcement, exceeding its New York close at 120.79 yen. The dollar last trade in the 120.00-yen level late February in Tokyo.

Still, Tokyo traders said the dollar is unlikely to break above 121.00 yen in the near future. While Japan's data cast a small shadow over its five-year economic growth underpinned by robust capital spending,

"Today's result is slightly weaker than expected but cannot be considered bad," and is broadly in line with Japan's central bank's view, said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp.

"This result is not going to affect the timing of the next (rate) hike," she added, predicting it will come in September, in line with the market's majority view.

Wrapping up its two-day policy board meeting, the Bank of Japan said early Thursday afternoon that it left its key interest rate unchanged at 0.5 percent Thursday, matching expectations amid a recent slide in consumer prices.

Against other Asian currencies, the dollar was mostly higher, rising to 928.00 South Korean won from 924.00 the previous day and to 7.8189 Hong Kong dollar from 7.8180. It fell to 46.750 Philippine peso from 46.850.