The dollar rallied to around ¥114 in Tokyo trading on Monday, backed by a sharp rebound in Japanese stock prices as risk aversion among investors receded.
At 5 p.m., the dollar was at ¥113.74-74, up from ¥112.16-17 at the same time Friday. The euro was at $1.1210-1211, down from $1.1289-1289, and at ¥127.51-58, up from ¥126.61-62.
The greenback briefly topped ¥114 in the afternoon as the Nikkei average finished up more than 1,000 points after losing over 1,800 points last week.
It shed gains later, facing “large amounts of sell orders around the 114-yen threshold,” said an official at a foreign exchange brokerage house.
“Some traders are eager to sell on rallies,” an official at a major Japanese bank said. The dollar struck a 15-month low below ¥111 last week.
“There is a sense of caution about driving the dollar higher,” the brokerage official added, citing the additional factor of the U.S. market’s closure on Monday for a national holiday.
Higher stock and oil prices overseas late last week “helped ease excessive risk-off sentiment,” an official at a major securities firm said.
But an official at an asset management firm warned: “The dollar-yen rate is not in up-trend now, as market sentiment is not necessarily leaning toward optimism.”
On Monday, the dollar-yen rate was little affected by news that the economy shrank an annualized 1.4 percent in October-December.
The dollar was partly supported by resilience in Chinese shares following better-than-expected Chinese trade data for January, analysts said.