The dollar stalled around ¥121.20 in late Tokyo trading on Monday after cutting early losses thanks to buybacks.
At 5 p.m., the dollar stood at ¥121.24-25, down from ¥121.92-93 at the same time Friday. The euro was at $1.0960-0961, up from $1.0951-0952, and at ¥132.89-90, down from ¥133.52-53.
In early trading, the dollar slipped below ¥120.70, carrying over its weak tone from overseas trading on Friday, when the U.S. currency was hit by selling amid global stock sell-offs on the back of a plunge in crude oil prices.
Investors sold stocks to buy bonds in order to reduce their risk exposure amid worries over further drops in crude oil prices, market sources said.
Around noon, the dollar attracted buybacks and rose above ¥121 after Tokyo stocks erased some of their early losses.
Some institutional investors moved to buy the dollar as they believe that the U.S. currency has been oversold, a currency broker said.
In late hours, the dollar drew buying following a rise in Chinese stock prices, but the currency ran out of gas at levels around ¥121.20.
The dollar’s resilience stemmed mainly from short covering by short-term players, an official at a foreign exchange margin trading service firm said.
“It was difficult to buy the dollar further against the yen because there were no fresh dollar-positive factors,” the official also said.
“Unless the crude oil and stock markets regain their stability, dollar-yen trading is unlikely to become stable,” a major Japanese bank official said.