The dollar rose above ¥82.70 in Tokyo trading Wednesday on hopes for additional monetary easing by the Bank of Japan after the Lower House election Sunday.
At 5 p.m., the dollar stood at ¥82.78-79, up from ¥82.38-40 at the same time Tuesday. The euro was at $1.3002-3004, up from $1.2940-2942, and at ¥107.64-65, up from ¥106.62-65.
In early trading, the dollar carried over its solid tone from overnight trading overseas, where the greenback gained ground on the yen in line with the euro’s rise against the Japanese currency thanks to improvement in a German economic sentiment index for December.
The dollar drew renewed buying after news that North Korea launched what was believed to be a long-range ballistic missile, rising above ¥82.60 at one point.
“As the launch was conducted in an area surrounding Japan, investors moved to buy the dollar as a safe-haven currency,” said Takashi Okura, senior forex strategist at Yutaka Shoji Co.
“The launch came as a little surprise,” an official of a major Japanese bank said, as there had been speculation that North Korea would delay the blastoff.
Even so, the impact of the launch on the foreign exchange market was limited, brokers said.
In the afternoon, the yen came under selling pressure against other major currencies due to position-adjustment moves. After European players joined trading in late hours, the dollar topped ¥82.70.
The yen’s fall seems to reflect investors’ growing risk appetite on the back of higher stock prices, an official at a foreign exchange trading service firm said.
Attention shifted to a policy decision by the U.S. Federal Reserve and a Wednesday briefing by Fed chief Ben Bernanke.