The dollar briefly rose above ¥99 in Tokyo trading Thursday, aided by a rise in stock prices after a news report that fueled hopes for a corporate tax cut in Japan.
At 5 p.m., the dollar stood at ¥98.90-93, up from ¥98.53-54 at the same time Wednesday. The euro was at $1.3517-3518, up from $1.3484-3486, and at ¥133.69-72, up from ¥132.87-89.
In early trading, the dollar came under selling pressure and fell below ¥98.30 at one point after Tokyo stocks dropped sharply but cut the losses thanks to buybacks by real demand-backed players.
The dollar briefly surged above ¥99.10 in line with a rebound in stock prices following the news that the Japanese government will include a plan to discuss a cut in the effective corporate tax rate in an upcoming economic stimulus package, market sources said.
“Dollar-yen rates moved simply in line with stock price fluctuations,” an official at a bank-affiliated brokerage house said, adding that “dollar-yen trading is still lacking a clear direction for now.”
“Although the dollar was supported by stock price gains, its topside was capped by selling on a rally at levels around ¥99, reflecting worries about U.S. fiscal problems,” an official at a foreign exchange broker said.
Investors sold the yen and bought foreign currencies in the morning on expectations for the planned establishment Thursday of a foreign currency-denominated investment trust fund worth some ¥20 billion, an official at a foreign exchange margin trading service firm said.
After the U.S. Federal Reserve decided to maintain its quantitative easing at a monetary policy meeting last week, the dollar has been on a weak note, market sources said.