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Greenback hovers around ¥97.50

JIJI

The dollar drifted around ¥97.50 in late Tokyo trading Wednesday after shedding most of its gains following stock price declines in Japan and China.

At 5 p.m., the dollar was at ¥97.55-57, compared with ¥97.40-42 at the same time Tuesday. The euro stood at $1.3073-3077, against $1.3143-3144, and at ¥127.55-56, down from ¥128.02-05.

The dollar retook ¥98 in early trading, supported by a series of stronger than expected U.S. economic indicators, including durable goods orders, new home sales and consumer confidence, traders said.

Of the data, seasonally adjusted new home sales in May came to 476,000 units on an annualized basis, up 2.1 percent from the previous month, hitting the highest level since July 2008, according to the U.S. Commerce Department.

The greenback was also supported by purchases from Japanese importers for month-end settlements.

But the dollar-bullish mood changed after the Shanghai stock market opened Wednesday’s trading lower.

The weakness of Shanghai stocks put a drag on the Tokyo Stock Exchange and helped push down the dollar below ¥98, market sources said. The U.S. unit also faced sales from Japanese exporters, the sources said.

Players were alarmed by the Shanghai market decline, which came in spite of their expectations that Tuesday’s announcement by the People’s Bank of China of liquidity supply to some financial institutions in the country would help stabilize financial markets there.

“Investor concerns over China can’t be wiped out unless Chinese authorities take decisive steps,” a foreign exchange broker said.