The dollar slumped below ¥101 in Tokyo trading Thursday as stocks fell sharply.
At 5 p.m., the dollar stood at ¥100.83-84, down from ¥101.69-73 at the same time Wednesday. The euro was at $1.2960-2965, up from $1.2862-2863, and at ¥130.71-73, down from ¥130.80-82.
The greenback lost further ground after sluggish stock markets in the United States and Europe prompted risk-averse investors to snap up the yen versus the dollar in overnight trading abroad.
In New York on Wednesday, market participants cashed in on the dollar’s recent rises versus other major currencies that reflected expectations for the U.S. Federal Reserve to scale down its quantitative easing in the wake of a series of solid U.S. economic indicators released recently.
In morning trading here, the dollar temporarily recovered to levels around ¥101.50 as the greenback attracted some buybacks after the Nikkei average pared earlier losses at one point.
The U.S. currency was also supported by buying from Japanese importers for their settlement purposes.
But the dollar fell again as the Nikkei widened its losses to end the day more than 5 percent lower. The TSE’s tumble soured investor sentiment and prompted overseas speculative players to sell dollars for yen to adjust their positions, market sources said.
Market players believe that foreign exchange rates will continue to reflect stock market moves for the time being.
“Unless stocks begin to stabilize, the dollar-yen pair is likely to show volatile moves,” said an official of a major trust bank.
An official at a currency broker said the dollar could fall below ¥100 if the stock market continues its downturn.