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Dollar briefly slips below ¥98.50

JIJI

The dollar traded moderately above ¥99 in Tokyo trading late Thursday after slipping below ¥98.50 on news from the U.S. Federal Reserve and Bank of Japan.

At 5 p.m., the dollar stood at ¥99.28-30, down from ¥100.45-46 at the same time Wednesday. The euro was at $1.3028-3030, up from $1.2809-2810, and at ¥129.36-39, up from ¥128.68-69.

The dollar slumped below ¥98.50 in early trading overseas, in the face of the Fed’s unexpectedly cautious stance on scaling back its quantitative monetary easing.

In Tokyo, the U.S. currency bounced back way above ¥99 in the morning but again slipped below ¥98.50 in the afternoon, following the Bank of Japan’s decision to keep its current monetary policy unchanged at its policy-setting meeting. Later in the afternoon, the greenback pared earlier losses against the yen, supported by rebounds of Japanese and other Asian stocks.

The minutes of the June 18-19 meeting of the Federal Open Market Committee showed Wednesday that many Fed policymakers believe further improvement in the outlook for the U.S. labor market would be necessary before the central bank begins to slow the pace of asset purchases.

Fed Chairman Ben Bernanke said in a speech later in the day that the current high jobless rate and low inflation underscore the need for a highly accommodative monetary policy.

The Fed minutes and Bernanke’s remarks surprised currency market players, as they were beginning to factor in an early start of the Fed’s tapering of its quantitative easing, following last week’s strong U.S. jobs data for June.