The dollar rose against the yen in Asia Thursday after Shinzo Abe, the front runner to be Japan's next prime minister after elections next month, said he would employ unlimited easing to stem years of deflation.
The dollar bought 80.62 yen in Tokyo afternoon trade, up from 80.23 yen in New York late Wednesday where the greenback had climbed above 80 yen.
The euro also soared against the Japanese currency, changing hands at 102.63 yen from 102.19 yen, while the European unit bought $1.2742, against $1.2734.
The yen lost ground after Abe, leader of the main opposition Liberal Democratic Party stoked expectations for early aggressive easing steps by the Bank of Japan (BoJ), said a senior dealer at a major Japanese bank.
He said the central bank should employ unlimited easing to achieve a 2-3 percent inflation target.
"Only by implementing unlimited easing to achieve this target will the market show reaction," Abe said during a speech in Tokyo a day after a senior ruling party official confirmed a general election was now set for December 16.
"If we come into power, we will implement bold monetary easing through an accord forged with the Bank of Japan," he added.
Opinion polls point to dwindling support for Prime Minister Yoshihiko Noda as he heads into a face-off with Abe, a conservative former prime minister.
The dollar rose in New York with an Abe victory seen as a yen-selling factor given his support for further Bank of Japan easing, which tends to weigh on the currency.
Analysts said the trend of a weaker yen was likely to continue but may fade due to economic problems elsewhere in the world.
The yen has been seen as safe bet by dealers at a time of economic uncertainty, with fiscal turmoil in Europe and the unsteady US economic recovery.
There are also rising fears that the United States could fall off a fiscal cliff of tax hikes and spending cuts if a deal between bitterly divided Republicans and Democrats is not reached before January 1.
Risk aversion also set in owing to Middle East tensions after an Israeli air strike in Gaza Wednesday that killed a Hamas military chief, reigniting tensions in the region.
The dollar was mixed against other Asia-Pacific currencies.
It fell to 9,625 Indonesian rupiah from 9,637 rupiah, and to 1,086.30 South Korean won from 1,086.35.
The greenback edged up to 30.71 Thai baht from 30.68 baht, to 55.01 Indian rupees from 54.97 rupees, to Tw$29.07 from Tw$29.04, to Sg$1.2230 from Sg$1.2219 and to 41.21 Philippine pesos from 41.10 pesos.
The Australian dollar fell to $1.0376 from $1.0450, and China's yuan gained to 12.90 yen from 12.74 yen.