The U.S. dollar momentarily slid to a 33-month low against the yen Monday, rattling Tokyo investors who handed the stock market its worst setback in two years amid concerns that the currency fluctuations might undermine an export-driven recovery in Japan.
By late afternoon, the dollar had rebounded a bit from its morning level of 111.37 yen, its lowest against the Japanese currency since December 2000. But market commentators said a weekend statement by finance leaders from the Group of Seven industrialized nations calling for “more flexibility” in exchange rates — the catalyst for the selloff — had made the dollar ripe for selling.
“It’s going to be hard to change the dollar’s downward momentum now,” said Masamichi Koike, Sumitomo-Mitsui Bank’s head currency dealer.
Morgan Stanley currency analyst Toru Umemoto predicted the dollar could sink as low as 105 yen.
The dollar was trading at 112.31 yen on the Tokyo foreign exchange market at 5 p.m. Monday, down 2.93 yen from 115.24 yen late Friday and also below the 114.27 yen it bought later that day in New York trading.
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