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Dollar down against yen after Fed-fuelled rally in New York

TOKYO--The dollar edged down against the yen Thursday after hitting five-year highs in New York in response to the U.S. Federal Reserve's decision cut back its stimulus program next month, citing a pick-up in the economy.

Emerging market currencies fell having previously enjoyed healthy rallies on the back of the stimulus as traders took advantage of Fed's cheap rates to seek out better returns.

In late afternoon trade the greenback eased to 104.00 yen in Tokyo from 104.20 yen late in New York, where it peaked at 104.36 yen — its highest since early October 2008 — but still well up from levels just below 103 yen in Tokyo Wednesday.

The U.S. unit was a tad higher against the euro. The single currency bought US$1.3670, against US$1.3680 in New York, and much stronger than the US$1.3770 mark in Tokyo Wednesday. The euro also slipped to 142.10 yen compared with 142.56 yen.

The Australian dollar fell to 88.21 U.S. cents at one stage Thursday — its lowest level against the greenback since August 2010. It edged up slightly to 88.45 cents by late afternoon.

The euro was also supported by German business and investor confidence reports that offered an upbeat view on Europe's biggest economy.

The yen could face further pressure as the Bank of Japan starts a two-day policy meeting Thursday, with speculation rising that it will add to its own stimulus to boost growth.

Against emerging market units the greenback rose to 1,060.22 South Korean won from 1,052.35 won, to 62.43 Indian rupees from 61.87 rupees, and to 44.44 Philippine pesos from 44.29 pesos.

The U.S. unit also rose to 12,163 Indonesian rupiah from 12,126 rupiah, and to 32.41 Thai baht from 32.23 baht.

The Chinese yuan changed inched up to 17.12 yen from 16.91 yen.

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