The dollar erased earlier gains to return to levels around ¥113 in Tokyo trading on Monday, dragged down by drops in Chinese shares and the yuan despite a weekend Group of 20 agreement to boost economic growth and stabilize markets.
At 5 p.m., the dollar stood at ¥112.99-113.00, up from ¥112.87-88 at the same time Friday. The euro was at $1.0956-0957, down from $1.1057-1057, and at ¥123.79-81, down from ¥124.81-82.
The greenback was firmer at levels slightly below ¥114 in the early morning, following gains in New York trading hours on Friday on solid U.S. data including revised U.S. real gross domestic product in October-December.
But later in the morning, the dollar fell below ¥113.30 as China set a lower yuan reference rate against the U.S. currency, traders said.
The dollar accelerated its downswing in the afternoon, temporarily slipping through ¥112.80, also dampened by falls in Japanese and Chinese shares, as well as selling to lock in profits, they said.
“The G-20 agreement to use all policy tools had been expected to shore up Chinese shares, but they fell indeed, triggering dollar selling versus the yen on disappointment,” a market source said.
In a communique issued after the two-day meeting in Shanghai through Saturday, the finance ministers and central bank governors of the 20 advanced and emerging economies vowed to “use all policy tools” to “strengthen growth, investment and financial stability.”
The G-20 officials also renewed their pledged to “refrain from competitive devaluations.”
The U.S. unit later retook ¥113 after Shanghai stocks showed resilience.
The dollar is unlikely to be aggressively sold against the yen this week, ahead of the release Friday of the closely watched U.S. employment report for February, said an official at a currency margin trading service provider.