By Richard Leong
NEW YORK (Reuters) - The yen jumped to an 18-month high against the dollar on Tuesday, extending gains on persistent doubts the Bank of Japan will intervene to stem a dramatic rise that has undermined attempts to reflate the world's third-biggest economy.
The yen has risen over 12 percent against the dollar so far this year. Further gains would intensify speculation of BOJ intervention sooner rather than later, as Japanese politicians have raised concerns about the yen's run-up.
Japanese Prime Minister Shinzo Abe is due to visit Italy and Germany in a tour some believe he will use to try to set the stage for possible intervention in currency markets as Japan prepares to host a G7 meeting this month.
Attendees at previous G7 meetings have frowned upon intervention, and Tokyo is sensitive to criticism it is trying to engineer a weaker yen through ultra-loose monetary policy.
"It makes it more difficult for Japan to intervene in the near term," said Ian Gordon, G10 FX strategist at Bank of America Merrill Lynch (NYSE:BAC) in New York.
Last week, the dollar booked its biggest weekly drop since 2008, more than 5 percent against the yen.
The greenback was little changed at 106.45 yen
Renewed anxiety about sluggish global growth stoked a selloff in stock and commodity markets worldwide, pushing investors to the safety of low-yielding, liquid currencies. [MKTS/GLOB]
The euro, another low-yielding currency like the yen, reached $1.1616
The euro's turnaround partly fed a rebound in the dollar index (DXY), which hit its lowest in over 15 months before finishing up 0.35 percent at 92.949.
Sterling retreated from a four-month peak as a poll showed British voters who favor leaving the European Union hold a razor-thin edge over those who want to stay. The pound
Losses in oil
The Australian dollar initially tumbled after the Reserve Bank of Australia cut interest rates by 25 basis points to record lows 1.75 percent, with traders expecting more easing to fight deflation.
The Aussie dollar lost 2.3 percent to $0.7486