Dollar briefly plunges below ¥102


The dollar tumbled to a seven-week low below ¥102 in early morning trading in Tokyo on Monday, battered by selling on fears over emerging economies.

After falling as low as around ¥101.80, however, the greenback pared losses on purchases by Japanese importers and players who took courage from Tokyo stocks’ resistance to a further fall after a tumble early in the day, traders said.

At 5 p.m., the dollar stood at ¥102.68-70, down from ¥103.35-38 at the same time Friday. The euro was at $1.3687-3690, little changed from $1.3686-3689, and at ¥140.55-58, down from ¥141.48-50.

The Argentine peso’s plummet late last week fueled concerns over emerging economies, boosting risk-averse attitudes among investors all over the world and broadening the yen’s safe-haven appeal, traders said.

The Argentine peso’s rout followed plunges of currencies in other emerging economies, including the Turkish lira and the Thai baht.

“It’s hard to predict whether emerging economies’ situations will soon be stabilized,” a currency brokerage house official said.

“The risk-off sentiment is expected to persist, with default concerns over Chinese financial products unabated,” another currency broker said.

Some analysts warn of a further fall by the dollar against the yen, but few expect the current market turmoil to lead to a financial crisis.

The U.S. currency’s recent falls are instead a “good opportunity for Japanese importers to buy,” an official at a major Japanese bank said. Their purchases are expected to help the dollar stage a rally, the official said.

Meanwhile, the government’s announcement earlier in the day that Japan’s trade deficit in 2013 swelled to a record high had only a limited impact on the currency market.

Amid the worry over emerging economies, market participants are awaiting the outcome of the U.S. Federal Reserve’s two-day Federal Open Market Committee meeting that started Tuesday.

The Fed decided at the last FOMC meeting in December to taper its monthly bond purchases from $85 billion to $75 billion.