Dollar in tight band atop ¥102.50


The dollar hovered in a tight range mostly above ¥102.50 in Tokyo trading Monday, as currency players found it difficult to tilt their positions either way on a lack of fresh trading factors.

At 5 p.m., the dollar stood at ¥102.53-53, almost unchanged from ¥102.51-51 at the same time Friday. The euro was at $1.2864-2865, down from $1.2870-2878, and at ¥131.89-96, against ¥131.97-99.

In overseas trading late last week, the dollar topped ¥103 and hit the highest level in four years and seven months, bolstered by stronger-than-expected readings in U.S. economic data released Friday, including the University of Michigan’s consumer sentiment index for May.

Thanks to the strong economic data, speculation grew that the U.S. Federal Reserve may scale down its quantitative easing earlier than expected, sources said.

The dollar skidded sharply to near ¥102 in Oceanian trading hours early Monday morning, due to selling triggered by weekend remarks by economic revitalization minister Akira Amari, who expressed concerns over an excessive weakening of the yen, the sources said.

But after the wave of selling subsided, the dollar bounced back in Tokyo trading, helped by buying on dips at levels below ¥102.50 from individual investors, the sources said.

An official at a foreign currency broker said, “The dollar seemed to attract buybacks due to persistent expectations of further gains against the yen.”

Even Amari’s remarks apparently did not have as big an impact as to change the broad market trend of the dollar rising against the yen,” a major Japanese bank official said.

The dollar was later confined in a narrow range above ¥102.50 as market players retreated to the sidelines to see developments in overseas financial markets.

Market participants are now waiting for Fed Chairman Ben Bernanke’s congressional testimony Wednesday. “We need to closely watch Bernanke’s testimony to assess the Fed’s policy stance,” an official at another Japanese bank said.

With attention focused on the U.S. economy, an economist said remarks by Bernanke and other financial authorities would be the biggest trading factor for now.