The dollar rose above ¥102 in Tokyo trading Tuesday against a backdrop of stock price rebounds following steep falls in recent sessions.
At 5 p.m., the dollar was quoted at ¥102.24-24, up from ¥101.00-01 at the same time Monday. The euro was at $1.2904-2904, down from $1.2938-2941, and at ¥131.92-93, up from ¥130.69-70.
After drifting aimlessly around ¥101 in overseas trading overnight, with the U.S. and British markets closed for national holidays, the U.S. currency leapt above ¥101.50 in Tokyo trading as the Nikkei average surged above 14,300 soon after opening below 14,000.
The greenback gradually extended its advance versus the yen later to retake the ¥102 level after diving below the level late last week amid volatile stock price movements.
“The dollar seemed to be lifted against the yen by a rush of short covering by those who had increased dollar-short positions, betting on another stock price fall,” an official at a foreign exchange brokerage said.
The dollar was also supported by Japanese importers and other real demand-backed buyers, traders said.
The Tokyo currency market has recently been tied to the domestic stock market, which has swung wildly since Thursday.
“The dollar-yen rate has shown stronger reaction to stock price rises than to stock falls, indicating that the dollar’s downside against the yen has become firmer,” an official at a major Japanese bank said.
“Market participants are increasingly confident about the yen’s downtrend in the medium to long term,” an official at a bank-affiliated securities firm said.