The yen had its biggest decline against the euro since December after Japan said it sold its currency several times in February to stem a rally that threatens exports.
Figures published on the Bank of Japan's web site indicate the central bank sold Japanese Yen 513 billion (US$4.35 billion) this month, marking the second straight month of sales. Traders speculate more sales will occur before the country's fiscal year ends March 31.
The yen is up 11 percent against the dollar the past 12 months.
The yen weakened to Japanese Yen 127.65 versus the euro in New York, from Japanese Yen 126.39 Thursday, the biggest decline since Dec. 2. It was at Japanese Yen 118.15 against the dollar, compared with Japanese Yen 117.56.
Durrant says the yen may weaken to Japanese Yen 125 per dollar by the end of March.
The Bank of Japan sold yen against the dollar and the euro, a senior official at the Ministry of Finance said. Japan's central bank sells and buys yen on behalf of the Ministry of Finance.
Demand for the Japanese currency has risen against the dollar amid concerns a war with Iraq would hurt the US's economy. The yen's recent gains -- it has strengthened 1.4 percent versus the dollar in February -- have also been fueled by Japanese companies bringing money home from abroad before the end of the fiscal year, analysts said.
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