The dollar fell below ¥94 in Tokyo Tuesday after Finance Minister Taro Aso said the Bank of Japan will not buy foreign bonds as a monetary easing step.
At 5 p.m., the dollar was at ¥93.46-46, down from ¥94.05-06 on Monday. The euro stood at $1.3336-3340, against $1.3335-3336, and ¥124.62-65, down from ¥125.42-44.
Aso made the remark on the day after Prime Minister Shinzo Abe told a Diet committee meeting that the BOJ’s purchases of foreign bonds may be an option.
“Until recently, many players were comfortable buying dollars as the Group of 20 finance ministers and central bankers did not point the finger at Japan” on the yen’s recent fall at their meeting in Moscow last week, a major Japanese bank analyst said.
“But Aso has become cautious about his remarks on foreign exchange issues,” the analyst added. “This seems to show that concerns about the yen’s weakness are strong among overseas authorities.”
Many market sources said the dollar will stay in an adjustment phase for the time being.
On Tuesday, trading was relatively quiet after a U.S. holiday. A key reason for less energy was the government’s imminent nomination of the Bank of Japan’s new leaders, including the successor to departing BOJ Gov. Masaaki Shirakawa, traders said.
“Players are waiting for new trading clues to emerge,” Money Partners Co. chief analyst Yoshifumi Takechi said, noting a main scenario for the foreseeable future would be range-bound fluctuations between ¥93.50 and ¥94.50.
“But if the dollar treads water for a while in the absence of new dollar-buying factors, dollar sales will intensify,” he said, warning that the greenback may fall below ¥90 at least temporarily.