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Dollar falls below ¥97 amid plunge

JIJI

The dollar fell below ¥97 in Tokyo trading Wednesday following its plunge abroad, but cut early losses thanks to the resilience of Tokyo stocks.

At 5 p.m., the dollar stood at ¥96.80-81, down from ¥98.17-17 at the same time Tuesday. The euro was at $1.3305-3307, up from $1.3266-3268, and at ¥128.79-83, down from ¥130.25-27.

In overseas trading overnight, the dollar briefly dived below ¥95.60 due to market disappointment at the Bank of Japan’s inaction over monetary policy at its two-day Policy Board meeting that ended Tuesday. The BOJ stopped short of extending the maximum duration of liquidity it supplies under fixed-rate money market operations, contrary to expectations in the market.

As stocks fell, a risk-averse mood grew in the foreign exchange market and the yen drew safe-haven demand, brokers said.

There were fund shifts to the yen from the currencies of some emerging economies, a bank official said.

Carrying over its sluggish tone from overseas trading, the dollar was weak below ¥96.50 in early trading.

It attracted buybacks and rose to around ¥96.50 later, partly aided by demand from real demand-backed players.

As Tokyo stock prices cut losses, the dollar extended the rebound and briefly rose above ¥97 in late trading.

But “it is still not known whether the dollar has hit bottom,” an official at a foreign exchange brokerage said.

Although the dollar is believed to be on an uptrend in the medium to long term, an official of a major Japanese bank said, “as the market is still prone to risk-aversion moves, the dollar may weaken further if stock prices in Japan and abroad become unstable.”