TOKYO, Sep 28, 2009 (AFP) - The yen rose to an eight-month high against the dollar in Asia Monday as exporters repatriated overseas earnings and Japan reiterated that it would not intervene to weaken its currency.

The dollar sank to as low as 88.25 yen, the weakest since late January. By mid-morning it stood at 88.86 yen, down from 89.60 in New York on Friday.

The euro fell to 130.54 yen from 131.64 while holding steady at 1.4689 dollars.

Japanese Finance Minister Hirohisa Fujii reiterated that the new government was not considering a foray into the market to sell the yen and help exporters.

"The recent dollar trend (against the yen) is not abnormal," he said.

It would be a "mistake" to artificially weaken the yen to defend exporters, he added, restating the new government's view that a stronger yen would boost consumption at home thanks to cheaper imports.

Market watchers said that Fujii's comments were no surprise, but they gave traders another excuse to push down the greenback against the yen.

"The market already knows Fujii's stance on currencies," Nomura Securities senior forex strategist Hiroshi Maeba told Dow Jones Newswires.

Analysts said the dollar could drop below its January low of 87.10 yen, piling additional pressure on Japanese exporters.

Traders are watching to see what dollar-yen exchange rate exporters are assuming when the central bank releases its quarterly Tankan business survey on Thursday.

"If substantially above the current rate, it would suggest Japanese exporters are hurting," NAB Capital strategist John Kyriakopoulos said.

In the previous Tankan survey in June, large manufacturers predicted that the dollar would average 94.85 yen in the year to March 2010.

Traders were also looking ahead to a survey of the private-sector labour market in the United States due out on Wednesday, ahead of a key official non-farm payrolls report slated for release on Friday.

The market will also be looking out for US data due Thursday on personal income and spending, as well as monthly auto sales.

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Copyright AFP 2009.