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Dollar falls on enigmatic G-7 remark

JIJI

The dollar fell below ¥93.50 in Tokyo trading Wednesday after showing volatile moves abroad over a statement from top finance officials of the Group of Seven major industrial nations.

At 5 p.m., the dollar stood at ¥93.20-21, down from ¥94.22-23 at the same time Tuesday. The euro was at $1.3464-3466, up from $1.3378-3380, and at ¥125.47-49, down from ¥126.07-07.

The statement issued Tuesday by the G-7 finance ministers and central bank chiefs said they will “not target exchange rates” and reaffirmed their “long-standing commitment to market-determined exchange rates.”

The dollar climbed to around ¥94.40 in overnight trading abroad after Finance Minister Taro Aso said that the statement is meaningful because his G-7 colleagues acknowledged that Japan’s measures to combat deflation have not been used for foreign exchange purposes.

But the greenback plunged to as low as ¥92.95 later in New York after a G-7 official said the statement was misinterpreted and that it signaled concerns over the yen’s excessive moves.

Junya Tanase, chief foreign exchange strategist at JPMorgan Chase Bank, said it’s “hard to tell the real intention of the G-7 statement. Market players are divided over its interpretation.”

The dollar moved above ¥93 in morning trading in Tokyo, with its downside supported by buying on dips. The U.S. unit temporarily sagged below the ¥93 line in the afternoon, pulled down by position-adjusting selling, but attracted buybacks in late trading.

“The dollar’s uptrend versus the yen remains intact,” said an official of a foreign exchange margin trading service firm. Many other market participants appeared to share this view.