The dollar substantially shed earlier losses to trade above ¥112 in Tokyo late Wednesday, helped by a rise in Shanghai stock prices.
At 5 p.m., the dollar stood at ¥112.10-11, down slightly from ¥112.13-13 at the same time Tuesday. The euro was at $1.0997-0997, down from $1.1037-1037, and at ¥123.28-29, down from ¥123.76-77.
The greenback hovered on a weak tone around ¥112 in the early morning after risk aversion grew following oil and stock price falls in Europe and the United States overnight.
The U.S. currency soon shot to ¥111.80, sending the benchmark 225-issue Nikkei stock average lower just after the opening.
In midmorning trade, it temporarily returned to the ¥112 line, backed by a Nikkei rebound and purchases by Japanese importers.
It dropped below ¥111.70 in the afternoon as the Nikkei’s losses grew, but showed resilience in returning to around ¥112.20 in late trading on the back of gains in Shanghai stocks.
Remarks by Bank of Japan Gov. Haruhiko Kuroda in the afternoon lifted expectations for additional easing by the central bank in March, lifting the dollar against the yen.
“The market was in no mood to test the dollar’s downside actively” ahead of a two-day meeting of the Group of 20 finance ministers and central bank chiefs in Shanghai from Friday, a foreign exchange broker said.
The dollar’s downside versus the yen was underpinned by “caution about verbal interventions by Japanese authorities warning against a further advance of the yen,” said an official at a currency margin trading service provider.
The euro retreated versus the yen and dollar as concern over Britain’s possible separation from the European Union continued to stoke risk-averse sentiment.