The trading range between the dollar and the yen will expand by around 50 per cent over the course of 2007, an analyst at UBS AG has claimed.

In foreign exchange trading yesterday the dollar was valued at ¥120.91. Over the past year it has fluctuated by a margin of ¥10.89, from ¥108.99 to a high of ¥119.88.

The 2006 range was the narrowest since 1971 and on historical trends can only grow during 2007, Jason Perl of UBS AG told Bloomberg.

"We are confident the range on the dollar-yen will expand 50 per cent relative to last year;" he said.

"Given the size of the range expansion we are expecting, it will have a positive impact on implied volatility as well."

The average annual range since 1997 is ¥19.11 and is expected to stand at ¥16.9 by year end. On one year dollar-yen options the implied volatility is now 6.76 per cent.