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Yen’s decline sends dollar past ¥120

JIJI

The dollar rose above ¥120 for the first time in seven years and four months in Tokyo trading on Friday.

At 5 p.m., the dollar was at ¥120.16-17, up from ¥119.87-89 the same time on Thursday, while the euro was at $1.2381-2382, up from $1.2303-2307, and at ¥148.77-79, up from ¥147.52-53.

In early trading, the dollar moved narrowly around ¥119.80 as a sense of achievement grew among currency players after the greenback rose as high as ¥120.25 in overseas trading overnight in line with the yen’s weakness against the euro.

The euro gained ground against other major currencies after European Central Bank President Mario Draghi said at a press conference Thursday that the ECB will reassess its monetary easing measures early next year.

Investors moved to buy the euro as Draghi stopped short of announcing the immediate launch of quantitative easing, such as sovereign bond purchases, market sources said.

Although the dollar came under selling pressure and briefly fell below ¥119.80 in the morning, the U.S. currency resisted falling further thanks to buying on dips.

The dollar was driven up by the stock market’s recovery from its slump earlier in the day and broke the ¥120 line again in the afternoon. The U.S. currency was also supported by settlement demand from Japanese importers.

The dollar extended the firmness into late afternoon trading, despite the earlier view that it would be hit by profit-taking after rising above the psychologically important threshold.

“Investors are anticipating the dollar’s further rally,” an official at a bank-affiliated brokerage house said.

“The ¥120 line was merely a passing point,” said a major Japanese bank official. The Japan-U.S. interest gap would become much wider, the official noted.

On the November U.S. employment report, economists estimate a month-on-month nonfarm payroll increase of around 230,000.

If the actual figure turns out to be smaller than the projection, the dollar may meet with hefty selling, an economist at a bank-affiliated brokerage house warned.