The dollar climbed above the ¥100 mark in Tokyo trading Tuesday on hopes for an economic stimulus package the government might implement alongside the consumption tax hike.
At 5 p.m., the dollar was quoted at ¥100.06-07, up from ¥99.57-58 at the same time Monday. The euro was at $1.3253-3253, up from $1.3177-3178, and at ¥132.60-63, up from ¥131.21-22.
The greenback was lifted against the yen by renewed buying in late Tokyo trading as European players joined the fray. Earlier in the day, it had drifted around the ¥99.50 level.
On Tuesday, Prime Minister Shinzo Abe instructed his Cabinet ministers to draw up measures by the end of September to absorb the potentially negative effects of raising the consumption tax from the current 5 percent to 8 percent next April. Abe is slated to make a final decision on the matter next month.
“Hopes for ‘Abenomics’ (Abe’s package of reflationary policies) are rising again, chiefly among overseas investors,” said an official at a foreign exchange margin trading service provider, noting that economic and fiscal policy minister Akira Amari in a speech Monday underscored the need for stimulus measures if the consumption tax is hiked.
A rise in U.S. Treasury yields in off-hours trading also spurred dollar purchases against the yen.
“The dollar is becoming firmer versus the yen due to receding risk averse sentiment, as the global economy is improving and the Chinese and European economies are bottoming out,” a foreign exchange dealer said.
China announced Tuesday that industrial output in August jumped 10.4 percent from a year earlier, the steepest rise in 17 months.