TOKYO (MarketWatch) -- The U.S. dollar moved lower against its Japanese counterpart in early Asian trading Monday, after funding rates for dollar loans dropped below those of its major rivals. The dollar was buying 90.59 yen, down from 90.69 yen in late North American trading Friday. The end of September brings the end of the first half of the Japanese fiscal year through March 2010. Traditionally, Japanese exporters repatriate overseas profits for book-closing purposes this time of year. Even in years when such repatriation isn't as great, investors' expectations of the seasonal investment flows are usually enough to buoy the Japanese currency. But beyond that, strategists cited lower dollar-borrowing costs as pressuring the greenback. In recent months, the dollar has lost to the yen whenever investors grew more wary and sought the perceived safety of a lower-yielding currency -- but now the dollar has taken the yen's place. "Dollar/yen until recently was a reliable risk appetite/aversion barometer. As risk appetite grew, the yen declined and vice versa. Well, no more -- and you can trace the change in behavior to the time short-term dollar rates dropped below the rates of the yen and [Swiss] franc," Cantor Fitzgerald economist Uwe Parpart said in emailed comments Monday. Last Friday, he said, the three-month London interbank offered rate, or Libor, for dollars stood at 0.29900%, below the franc's 0.30667% and the yen's 0.35938%, he said. "As this yield differential favoring the yen persists -- and it may even become more pronounced -- the dollar, not the yen and franc as was traditionally the case, will function as the major funding currency and be sold for higher-yielding risk assets," he said. The euro was buying $1.4532 in Asian Monday trade, up from $1.4587 late Friday, but the British pound traded at $1.6609, down from $1.6685.

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