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Dollar surges on strong China data

Jiji

The dollar surged above ¥89 in Tokyo trading Thursday, thanks chiefly to higher stock prices and favorable Chinese economic data.

At 5 p.m., the dollar stood at ¥89.26-28, up from ¥88.27-29 at the same time Wednesday. The euro was at $1.3299-3301, against $1.3296-3301, and at ¥118.75-77, up from ¥117.41-42.

After moving narrowly below ¥88.50 in early morning trading, the dollar briefly attracted buying after the release of Japan’s customs-cleared trading statistics for 2012, which showed a record deficit of about ¥6.9 trillion.

“The dollar was supported by Japan’s trade data, which were worse than market forecasts,” and a growing view in the market that the greenback’s downside is solid after it resisted dropping below ¥88 in overseas trading overnight, an official at a major Japanese bank said.

However, the dollar purchases proved short-lived. An official at a bank-affiliated think tank said the huge trade deficit for 2012 was within market expectations.

The dollar later attracted buybacks and rose above ¥89 after the HSBC China manufacturing purchasing manager’s index for January exceeded the boom-or-bust line of 50 for a third month.

After the Nikkei 225 average topped 10,600 in the afternoon, the dollar drew renewed demand and soared to around ¥89.30 at one point due to stop-loss orders.

The dollar extended gains after Yasutoshi Nishimura, senior vice minister of the Cabinet Office, reportedly said there would be no problem with an exchange rate of ¥100 to the dollar, an official at a foreex broker said.

But an official at a forex margin trading service said, “the dollar-yen rate level cited by Nishimura lacks in freshness, so the dollar is unlikely to rise way above ¥90.50 unless new positive factors emerge.”