The dollar slipped back below ¥118 in Tokyo on Tuesday, dragged down by continued turmoil on the stock market.
At 5 p.m., the dollar stood at ¥117.76-77, down from ¥118.56-56 at the same time Monday. The euro was at $1.0866-0866, up from $1.0814-0814, and at ¥127.97-98, down from ¥128.22-23.
The greenback moved weakly around ¥118.30 in early trade, following drops in crude oil prices and in European and U.S. stocks on Monday.
Stocks got off to a weaker start, forcing the dollar down to around ¥118.10. It briefly attracted purchases from Japanese importers later in the morning but met with selling on a rally in the afternoon as the Tokyo stock market expanded losses.
Market sources said the dollar’s fall was influenced also by falls in Chinese stocks as players became risk-averse.
Investors are paying close attention to the U.S. Federal Reserve’s two-day Federal Open Market Committee meeting from Tuesday and the Bank of Japan’s policymaking meeting that convenes for two days from Thursday.
“Some players moved to buy the dollar on expectations for additional monetary easing by the BOJ,” an official at a foreign exchange margin trading service firm said.
“The dollar is unlikely to fall sharply” before the monetary policy meetings in the United States and Japan, a currency broker said.
Meanwhile, one market source said players will refrain from actively purchasing the dollar on Wednesday as the currency market will remain nervous.