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Greenback plunges below ¥92

JIJI

The dollar plunged below ¥92 in Tokyo trading Tuesday as the euro was battered after the general election in Italy left the country in political gridlock and raised uncertainties over the reconstruction of its public finances.

At 5 p.m., the dollar was quoted at ¥91.80-81, down from ¥94.12-17 at the same time Monday. The euro stood at $1.3047-3050, down from $1.3221-3223, and at ¥119.78-81, down from ¥124.46-48.

The dollar temporarily tumbled below ¥91 in overnight trading abroad, as currency players scrambled to buy back the yen, which is seen as a safe-haven currency, particularly versus the euro after news about the outcome of the Italian election.

The center-left coalition, vowing to continue Prime Minister Mario Monti’s austerity measures, won a majority of seats in the lower chamber of parliament, but the center-right coalition led by former Prime Minister Silvio Berlusconi, which opposes austerity measures, fared well in the Senate, leaving no bloc in control of the chamber.

The election results gave rise to worries that the debt-laden country’s fiscal reconstruction efforts will stall.

“The prospect of a political disarray in Italy dented market players’ risk appetite,” said an official of a trust bank.

The dollar drew some buybacks in early Tokyo trading and briefly topped ¥92.70 in the middle of the morning, helped in part by purchases from commercial demand-backed players.

“Japanese importers stepped up month-end dollar-buying,” said an official of a currency broker.

The U.S. currency came under renewed selling pressure in the afternoon.