The dollar briefly plummeted below ¥116.50 in Tokyo trading on Wednesday as risk aversion among investors flared up on a downward spiral of crude oil and stock prices.
At 5 p.m., the dollar was at ¥116.77-78, down from ¥117.90-90 at the same time Tuesday. The euro stood at $1.0939-0940, up from $1.0865-0865, and at ¥127.75-76, down from ¥128.11-11.
Risk-averse purchases of the safe-haven yen mounted in the Tokyo currency market, as key U.S. crude oil futures slid below $28 per barrel in off-hours trading and the benchmark Nikkei stock average sank to a 15-month low on the Tokyo Stock Exchange.
The U.S. currency hovered around ¥117.60 in early Tokyo trading, after climbing to as high as around ¥118.10 in overseas trading overnight on the back of a brief rebound in crude oil prices.
But later in Tokyo, the greenback began to fall almost one-sidedly and dropped below ¥116.50 in the afternoon, before recouping part of the losses.
Even after the dollar lost more than ¥3 from the beginning of the year, there are no signs of its bottoming out, traders said.
“The dollar could test its downside further,” a foreign exchange broker said.
“It seems difficult for the dollar to find a cue for rebound,” an official at a major securities firm said.
With the Bank of Japan set to hold a policy-setting meeting next week, the official said, “The central bank could face pressure to come up with a big surprise if the current situation continues.”