The dollar pared early gains to move below ¥117 in late Tokyo trading on Thursday, as investors dumped the currency as stocks hurtled lower.
At 5 p.m., the dollar stood at ¥116.73-74, marginally down from ¥116.77-78 at the same time Wednesday. The euro was at $1.0906-0908, down from $1.0939-0940, and at ¥127.32-33, down from ¥127.75-76.
The greenback briefly slipped below ¥116 in London for the first time in about a year on Wednesday, due to investor concerns over the crude oil market and China’s economy.
After rising back to around ¥116.90 in New York later on Wednesday, the dollar held firm around ¥117 in early Tokyo trading Thursday thanks to buybacks.
Later in the morning, it climbed close to ¥117.50, as risk aversion receded somewhat after the Nikkei opened higher and expanded gains. Purchases from Japanese importers also helped lift the U.S. currency versus the yen.
But the dollar lost steam to drop below ¥117 in the afternoon, affected by the stock rout.
“The stock market’s downturn was unexpected, rekindling a risk-off mood,” a currency broker said.
Players also moved to sell the dollar as Bank of Japan Governor Haruhiko Kuroda, in parliamentary deliberations Thursday afternoon, stopped short of hinting at additional monetary easing, an analyst at a bank-affiliated brokerage house noted.
Kuroda only reiterated that the BOJ will not hesitate to adjust its monetary policy if such move is necessary for achieving its 2 percent inflation goal. The bank is set to hold a monetary policy meeting for two days from Jan. 28.
“The yen is likely to remain strong for a while amid persistent concerns over China’s slowing economic growth and the crude oil market downswing,” one market source said, adding that the dollar may slip below ¥116 again.