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China fall puts dollar under ¥93.50

JIJI

The dollar gave up early gains to move mostly below ¥93.50 in Tokyo trading Monday, with its upside weighed down by slumps in Chinese stocks.

At 5 p.m., the dollar stood at ¥93.42-43, still up from ¥92.58-60 at the same time Friday. The euro was at $1.3007-3009, down from $1.3075-3076, and at ¥121.53-55, up from ¥121.05-07.

The dollar was solid above ¥93.50 in early trading, carrying over its strength in overseas trading Friday, when the greenback attracted demand following the release of favorable U.S. economic data, including the Institute for Supply Management’s manufacturing activity index for February.

The dollar rose further and topped ¥93.70 at one point after Bank of Japan Gov.-nominee Haruhiko Kuroda told a Diet hearing that he is determined to take all possible measures to overcome deflation. His remark boosted hopes for powerful monetary easing by the BOJ, brokers said.

But later, the dollar came under selling pressure and fell back far below ¥93.50 after Kuroda said that the BOJ’s monetary easing is not aimed at guiding the yen lower. Although bold monetary easing is needed, the central bank should not underwrite Japanese government bonds, Kuroda also said.

“Kuroda sounded more conservative than expected,” Rikiya Takebe of Okasan Online Securities Co. said.

An official at another securities house said Kuroda’s presentation of his commitment to monetary easing was less impressive than expected.

The dollar was also pressured by plunges in Chinese stocks after the Chinese government announced measures to curb home prices. Investors with dollar-long positions moved to lock in profits, an official at a major Japanese bank said.

“Expectations for the dollar to rise above ¥94 receded,” Okasan’s Takebe said.

Still, the dollar resisted falling further and showed some resilience in late hours, partly aided by a halt in drops in Chinese stocks and firmness in Tokyo equities.

Investors found it difficult to take fresh positions ahead of a Diet hearing Tuesday for BOJ Deputy Gov.-nominee Kikuo Iwata, brokers said.