The dollar hovered around ¥98 in Tokyo trading late Thursday as traders awaited a meeting of the Group of 20 finance ministers and central bank chiefs.
At 5 p.m., the dollar stood at ¥97.99-99, against ¥98.11-12 at the same time Wednesday. The euro was at $1.3053-3053, down from $1.3158-3160, and at ¥127.90-93, down from ¥129.10-12.
The greenback dropped as low as around ¥97.60 in the morning in line with a dismal start by the Nikkei 225. But as the Nikkei almost recouped its initial losses by the early afternoon, the dollar climbed back to as high as around ¥98.40.
“Stock prices and the dollar-yen rate seemed to be closely linked. They showed a very strong correlation,” an official at a major Japanese bank said.
While the benchmark stock index again extended losses later, the dollar lost ground and traded in a narrower range around the ¥98 line, with traders retreating to the sidelines ahead of the G-20 meeting slated to Thursday in Washington.
Overall, the dollar remained firm against the yen on the back of aggressive monetary easing by the Bank of Japan, traders said. “Sooner or later, the dollar will rise toward ¥100,” another Japanese bank official said.
The yen was also dampened by a government report Thursday that Japan incurred a record customs-cleared trade deficit of ¥8.17 trillion in fiscal 2012.
“There is no choice but to refrain from actively taking (yen-short) positions” ahead of the G-20 gathering, an official at a bank-affiliated securities firm said.
“At the G-20 meeting, the weaker yen is likely to avoid criticism, but the currency market will be susceptible to comments from top financial officials,” a market source said.