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Dollar stays steady at around ¥98

JIJI

The dollar erased early gains to trade slightly below ¥98 in late Tokyo trading Tuesday, pressured by a partial shutdown of the U.S. government after Congress failed to pass an emergency budget bill by midnight Monday.

At 5 p.m., the dollar stood at ¥97.91-93, little changed from ¥97.87-89 at the same time Monday. The euro was at $1.3567-3568, up from $1.3498-3500, and at ¥132.85-86, up from ¥132.12-14.

In the morning, the U.S. currency climbed as high as around ¥98.70, following media reports that a Republican lawmaker had suggested the GOP could make a compromise with Democrats to avoid a government shutdown. But as a last-minute deal was not reached, the greenback came under renewed selling later.

“We dare not buy the dollar now, as the congressional impasse is expected to continue for the time being, with a deadline Oct. 17 looming large for negotiations on the issue of raising the debt ceiling,” an official at a major trust bank said.

The dollar was briefly lifted by Prime Minister Shinzo Abe’s announcement in the early afternoon that the consumption tax will be raised from the current 5 percent to 8 percent next April.

In the evening, Abe was set to announce a ¥5 trillion economic stimulus package designed to minimize the potentially adverse effects of the tax hike on domestic consumption.

“The economic package expected to be implemented with the consumption tax hike could be a factor encouraging yen-selling against the dollar, but investors are paying more attention to the U.S. fiscal issue,” an official at a major Japanese bank said.