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Stock rally sends dollar atop ¥99

JIJI

The dollar rose above ¥99 in Tokyo trading Monday, thanks chiefly to a rally in Tokyo stock prices amid easing concerns over an imminent military attack against Syria.

At 5 p.m., the dollar stood at ¥99.33-34, up from ¥98.04-05 at the same time Friday. The euro was at $1.3209-3210, down from $1.3236-3238, and at ¥131.21-23, up from ¥129.77-80.

In early trading, the dollar attracted demand following Sunday’s release of a stronger-than-expected Chinese manufacturing industry purchasing managers’ index for August.

The dollar extended gains and rose to around ¥98.60 later in line with a rise in Tokyo stocks.

The greenback was also aided by the first growth in three quarters of Japanese nonfinancial companies’ combined capital expenditures in April-June shown in the Finance Ministry’s corporate activity survey.

After European investors joined trading in late hours, the dollar drew renewed demand and topped ¥99.

“Helped by a solid performance of the benchmark Nikkei stock average, the dollar apparently attracted purchases from financial institutions,” a foreign exchange dealer said.

The dollar was propped up by the receding of risk-averse sentiment over the situation in Syria, after U.S. President Barack Obama said Sunday he will seek congressional authorization for military intervention in the Middle Eastern country over its alleged use of chemical weapons, market sources said.

Members of the U.S. Congress are slated to take votes on military action against Syria in the week from Sept. 9.

“As there will be no military attack against Syria at least in the coming week, the situation in the war-torn country is no longer a short-term trading incentive for the foreign exchange market,” one market source said.

Investors are now waiting for economic events later this week, including the European Central Bank’s policy-setting meeting on Thursday and the U.S. government’s jobs data for August, due out Friday.

“Currency players are finding it difficult to tilt their investment positions drastically either way until late this week,” an official at a Japanese brokerage said.