The dollar dropped below ¥113.50 in Tokyo trading on Tuesday, weighed down by the downbeat Japanese stock market and a fall in crude oil prices following the Bank of Japan’s decision not to ease its monetary policy further.
At 5 p.m., the dollar stood at ¥113.05-05, down from ¥113.76-76 at the same time Monday. The euro was at $1.1115-1115, down from $1.1139-1140, and at ¥125.69-69, down from ¥126.73-74.
After trading around ¥113.80 in the early morning, the greenback moved narrowly at levels above ¥113.60-70 as market participants awaited the BOJ’s monetary policy decision later in the day.
The dollar temporarily showed volatile moves at around the time the BOJ announced a decision to keep its monetary policy framework featuring negative interest rates unchanged at the end of its two-day Policy Board meeting.
“The dollar was lifted by speculative purchases before the announcement, but fell back on selling as a knee-jerk reaction to the decision,” an official at a foreign exchange margin trading service firm said.
The U.S. currency later slumped below ¥113.30, as Japan’s benchmark 225-issue Nikkei stock average widened losses.
After showing some resilience to trade above ¥113.40 on buybacks, the dollar came under selling pressure again to hover around ¥113 in the late hours, reflecting a decline in crude oil prices.
The dollar’s setback in the afternoon “partly reflected expectations by some market players for additional monetary easing measures by the BOJ and the decision keep the policy intact prompted some selling in disappointment,” an official at a major brokerage house said. Still, the selling was only for adjusting trading positions, the official added.
BOJ Gov. Haruhiko Kuroda’s closely watched news conference failed to give any fresh incentives to buy dollars. “His remarks were not clear-cut and lacked strength,” an official of a currency brokerage house said.