The dollar fell back below ¥92.20 in Tokyo trading Tuesday on the heels of a slump by the euro versus both the dollar and the yen on revived concerns about European fiscal problems.
At 5 p.m., the dollar was quoted at ¥92.19-21, down from ¥92.73-75 at the same time Monday. The euro was at $1.3469-3470, down from $1.3626-3630, and at ¥124.18-21, down from ¥126.37-39.
“There are uncertainties stemming from political issues in the eurozone, making it unlikely for the dollar to recover the ¥93 level in the near term,” an official at a major Japanese bank said.
The dollar briefly rose above ¥93 for the first time since May 14, 2010, in London trading overnight.
The dollar lost ground later as the euro dived on concerns that a reported corruption scandal involving Spanish Prime Minister Mariano Rajoy and growing public support for former Italian Prime Minister Silvio Berlusconi could hamper austerity efforts by the two heavily indebted eurozone countries, traders said.
After dropping as low as just below ¥92 in Oceanian trading early Tuesday, the dollar temporarily rebounded to levels around ¥92.50 in Tokyo later in the day, backed by expectations of further monetary easing by the Bank of Japan and purchases by Japanese importers for settlement purposes, traders said.
“There are many importing firms that have missed opportunities to buy the dollar (during its recent rapid rally),” another Japanese bank official said.
But the dollar weakened again in the afternoon in the face of a drop in the Nikkei stock average.
“Some traders opted to close positions or lock in profits” ahead of a policy-setting meeting of the European Central Bank later this week, a foreign exchange brokerage official said.