The dollar fell back below ¥102.40 in Tokyo trading Thursday amid reignited concerns over emerging economies despite central bank efforts to protect their currencies.
At 5 p.m., the dollar stood at ¥102.35-36, down from ¥103.12-14 at the same time Wednesday. The euro was at $1.3624-3626, down from $1.3662-3663, and at ¥139.44-46, down from ¥140.92-99.
The U.S. currency regained some lost ground in Tokyo after slumping below ¥102 in overseas trading in the early morning.
“Expectations for the dollar’s rise in the medium to long term remained strong, and some players moved to buy the dollar in a bet that the greenback’s downside is firm around ¥102,” an official at a major Japanese bank said.
Risk-averse sentiment strengthened again as the Turkish lira and the South African rand resumed their downswings despite interest rate hikes by their central banks earlier this week, traders said.
The dollar’s topside remained heavy vis-a-vis the yen, despite the U.S. Federal Reserve’s decision at a two-day Federal Open Market Committee meeting through Wednesday to carry out another $10 billion cut in its monthly asset purchases.
The FOMC decision came in line with market expectations. But because the continued tapering of quantitative easing has an effect of strengthening concerns over emerging economies, downside risks for the dollar will be intact unless stocks stage rallies in and outside Japan, an official at a major bank said.
“Risk-off sentiment is expected to continue for the time being, as there are also worries about Chinese financial products,” an official at a bank-affiliated securities firm said.