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Stock fall sends dollar below ¥102

JIJI

The dollar fell below ¥102 in Tokyo trading Thursday as sales of the currency intensified following a drop in Japanese stock prices.

At 5 p.m., the dollar was quoted at ¥101.94-95, down from ¥102.75-77 at the same time Wednesday. The euro stood at $1.3621-3622, up from $1.3569-3571, and at ¥138.87-89, up from ¥139.44-46.

The U.S. currency remained weak after its sluggish performance in overseas trading Wednesday, as the U.S. Institute for Supply Management’s nonmanufacturing business activity data for November showed a drop in the employment index, a component of the closely followed purchasing managers index, traders said.

After changing hands around ¥102.40 in early morning trading in Tokyo, the dollar fell further on sales from Japanese exporters. Position adjustment sales gathered steam in the afternoon as stock prices in Tokyo lost more ground, traders added.

The drop in the ISM employment index has put many market players on alert for possible sluggish results of the U.S. Labor Department’s employment data to be released Friday, sparking dollar sales, said a foreign bank official.

The greenback is vulnerable to position adjustment sales as long positions on the dollar have slightly outweighed short positions, a major Japanese bank official said.

A bank-linked brokerage house official attributed the dollar’s weakness to speculation about the Federal Reserve’s expected reduction in bond purchases.

On Wednesday, U.S. job service firm Automatic Data Processing Inc. announced a stronger than expected increase in private nonfarm payrolls in November, in contrast with the sluggish ISM employment index.