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Dollar takes risk-off fall below ¥113

JIJI

The dollar dropped to under ¥113 in Tokyo trading on Friday, as a fallback in Japanese stock prices fueled a risk-averse mood.

At 5 p.m., the dollar was at ¥112.94-95, down from ¥113.93-94 the same time Thursday. The euro was at $1.1117-1118, down from $1.1127-1127, and at ¥125.57-58, down from ¥126.78-79.

The greenback traded around ¥113.25 in the early hours after the yen attracted brisk buying as a safe haven currency in New York trading overnight, prompted by data from the U.S. Energy Information Administration showing that crude oil inventories in the latest reporting week hit a record high.

The dollar temporarily firmed to around ¥113.40 in early Tokyo trading, but later slumped to around ¥112.70 in line with the downturn in the benchmark Nikkei average.

In the afternoon, the greenback regained some ground to top ¥113 as the Nikkei recouped some losses. The dollar’s downside was also believed to be supported by buybacks for adjusting positions before the weekend, according to a currency broker.

But the dollar came under pressure versus the yen again in late trading.

In addition to weaker stock prices both in Japan and abroad, and the shaky oil market, receding speculation about an additional interest rate hike by the U.S. Federal Reserve helped worsen investor sentiment.

“The market remains susceptible to dollar-negative factors, and the topside of the dollar against the yen is likely to be limited,” an official of a major Japanese bank said.

Meanwhile, an official at a currency margin trading service said that, ahead of a meeting of the Group of 20 finance ministers and central bank chiefs in Shanghai late next week, “expectations for financial market stabilization are expected to underpin the dollar versus the yen.”