The dollar soared above ¥118 in Tokyo trading on Friday as risk aversion receded following a surge in Japanese stocks.
At 5 p.m., the dollar stood at ¥118.07-08, up from ¥116.73-74 the same time Thursday. The euro was at $1.0830-0831, down from $1.0906-0908, and at ¥127.87-89, up from ¥127.32-33.
The greenback firmed to around ¥117.90 in early trading, after advancing overseas on Thursday on remarks from European Central Bank President Mario Draghi signaling additional monetary easing might be in the cards at its next policy meeting in March.
Draghi’s comments lifted stock markets, helping create a risk-on mood. In addition, interest in purchasing the safe-haven yen receded after a rebound in crude oil prices.
The dollar later slid below ¥117.60 in Tokyo after a wave of profit-taking.
In the afternoon, the U.S. currency drew renewed purchases to top ¥118 as Tokyo stocks expanded their gains.
Still, one market source pointed to persistent worries about the dollar’s downside risks and an apparent eagerness to take profits when it rises.
“The pace of the dollar’s advance is somewhat slow compared with the rises in the stock market,” one broker noted.
“Players are finding it difficult to actively take dollar-long positions” amid the volatility, an official of a major Japanese bank said.
Partly amid lingering uncertainty over oil prices, it remains to be seen if the dollar has hit bottom, an official at a foreign exchange margin trading firm said.