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Dollar, tied to stocks, falls below ¥100

JIJI

The dollar fell below ¥100 in Tokyo trading Monday, due chiefly to selling by investors who moved to lock in profits.

At 5 p.m., the dollar stood at ¥99.93-94, down from ¥100.18-22 at the same time Friday. The euro was at $1.3502-3506, up from $1.3447-3451, and at ¥134.94-¥135.01, up from ¥134.72-73.

After moving around ¥100.30 in early trading, the dollar came under selling pressure as Tokyo stocks got off to a weak start.

The dollar attracted buybacks after Tokyo stocks turned higher at one point, but it met with renewed selling and briefly fell to around ¥99.90 as the Nikkei average fell into negative territory again in the afternoon.

Dampened by stocks’ failure to extend gains, “the dollar was dampened by selling aimed at locking in profits,” an official at a foreign exchange broker said.

“There are few positive factors to stimulate stepped-up dollar purchases,” an official at a bank-affiliated brokerage house said.

Still, an official at a major foreign exchange margin trading service firm said that “position-adjustment selling gained the upper hand after the dollar advanced sharply against the yen in recent sessions in line with stock price gains.” The dollar still has a solid tone, the official added.

Risk appetite has grown among investors thanks to rises in U.S. equity prices last week, market sources said.

After a congressional confirmation hearing by U.S. Federal Reserve Vice Chairwoman Janet Yellen, nominated as the next Fed chief, speculation has receded that the U.S. central bank may start scaling down its quantitative monetary easing by the end of the year, the sources said.

Looking ahead, an official at another bank-affiliated brokerage house said that “the dollar is expected to chase higher ground.”

Market participants are now watching whether the dollar will rise above ¥100.62, a level last marked in Tokyo on Sept. 11.

Given that dollar-yen trading has been affected mainly by stock price movements, rather than interest rate gaps between Japan and the United States, whether the dollar will rise further depends on the stock market performance, an official at a major foreign bank said.