SYDNEY (Reuters) - The U.S. dollar fell to its lowest in nearly eight months against the yen on Monday, as investors unwound short yen positions and the likelihood of Japanese intervention receded.

A woman exchanges money at a money exchange at Haneda airport in Tokyo September 15, 2009. REUTERS/Yuriko Nakao

The dollar fell to as low as 88.45 yen, its weakest since January 27, when it dropped to 88.41 yen. Japanese Finance Minister Hirohisa Fujii’s comments the new government would not pursue a weak yen policy were also helping the yen.

Fujii said he was opposed to deliberately weakening the yen or any other currency in a meeting with U.S. Treasury Secretary Timothy Geithner.

“Continued speculation that they will not intervene has led to capitulation of short-yen positions, led by the sterling/yen cross,” said Sue Trinh, senior currency strategist at RBC Capital Markets.

Japan has intervened in the currency market in the past to weaken the yen as this helped keep its competitive advantage in global trade. Analysts say the latest comments could see the yen rise past 87.10 yen, this year’s high.

Large margin calls on the pound/yen longs have also been behind the yen buying. The pound fell sharply to $1.5823, its lowest since June 8. Support for sterling was seen at around $1.5800.

The pound has been under pressure after Bank of England Governor Mervyn King said last week that a weak pound would help exports and the UK economy.

Latest data from the Commodity Futures Trading Commission showed net short positions in the pound more than doubled to 31,595 contracts in the week to September 22 from 12,487 a week earlier. Long positions on the yen rose to a net 45,615 contracts from 37,107. <IMM/FX>.

The euro edged higher against the U.S. dollar, helped by encouraging data showing U.S. consumer sentiment hit its highest level this month since January 2008. [ID:nN25501082]. The euro rose to $1.4717 from $1.4683 late on Friday in New York.

The Australian dollar edged up to $0.8670.