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Greenback drops below ¥101.50

JIJI

The dollar was weaker below ¥101.50 in Tokyo trading on Friday as risk-averse sentiment strengthened after a Malaysian Airlines jetliner was blown out of the sky in eastern Ukraine, killing nearly 300 people, and Israel began a ground invasion.

At 5 p.m., the dollar stood at ¥101.40-41, slightly down from ¥101.49-50 at the same time Thursday. The euro was at $1.3530-3530, down from $1.3533-3534, and at ¥137.21-22, down from ¥137.36-37.

The yen attracted safe-haven buying interest after the incident as fighting continues to rage between Ukrainian forces and pro-Russian separatists, taking the dollar as low as ¥101.10 in early Tokyo trading.

Malaysian Airlines’ MH17 is suspected to have been shot down by a surface-to-air missile.

The risk-averse mood was also fueled by growing uncertainty over the Israeli-Palestinian conflict as Israeli forces began a ground assault in Gaza on Thursday, traders said.

But the greenback later recouped much of the lost ground, supported by purchases from Japanese importers and institutional investors, as well as buybacks, traders said.

Traders retreated to the sidelines in late trading ahead of the three-day weekend in Japan. The Tokyo market will be closed Monday for a national holiday.

Risk aversion on increased geopolitical risks seems to have receded for now, considering the resilience of the dollar-yen rate as well as Japanese stock prices and long-term interest rates, traders said.

“There are concerns that the situation in Ukraine could escalate following the Malaysian airliner crash, but so far there has been no fresh development,” an official at a foreign exchange brokerage house said.

“Investors are eager to buy back (the dollar against the yen) but at the same time reluctant to chase higher (dollar) levels,” an official at a major Japanese bank said. “As a result, trading could become stalemated.”