The dollar temporarily plunged below ¥94 in Tokyo trading Thursday, reflecting risk-aversion moves following a massive drop in Tokyo stock prices.
Rebounding from intraday lows below ¥94, the dollar stood at ¥94.20-24 at 5 p.m., still down sharply from ¥96.80-81 at the same time Wednesday. The greenback’s exchange rate versus the yen retreated to levels before the Bank of Japan launched its large-scale quantitative and qualitative easing policy in early April under the initiative of new Gov. Haruhiko Kuroda.
The euro was at $1.3346-3346, up from $1.3305-3307, and at ¥125.71-74, down from ¥128.79-83.
The dollar carried over its weak tone vis-a-vis the yen from overnight trading overseas, where market players shunned riskier assets and opted for the yen as a safe-haven currency in line with sluggish global stock markets and active moves to shift funds away from emerging markets.
After moving above ¥95 in early Tokyo trading, the U.S. currency accelerated its downswing as the benchmark Nikkei 225 stock average widened losses. The dollar lost further ground in the afternoon to sink briefly below ¥94 after Tokyo stocks succumbed to heavy selling again and closed down more than 6 percent.
Although currency players had anticipated the dollar would remain weak in Tokyo trading Thursday, such a rapid fall was “beyond expectation and the effects of Kuroda’s easing policy have almost been wiped out,” said an official of a foreign exchange margin trading service firm.
An official a major Japanese bank said, “Following the dollar’s fall this far, market players may be in a mood to urge the BOJ and the government to implement additional measures.”