The dollar took a brief dive in Tokyo trading Wednesday, slipping below ¥107 for the first time since Nov. 14, 2016, weighed down by elevated volatility in stock markets in Japan and abroad.
The dollar sank as low as near ¥106.80 in the afternoon before settling at ¥107.40 at 5 p.m., down from ¥107.75 at the same time Tuesday. The euro strengthened to $1.2372 from $1.2317 and to ¥132.88 from ¥132.72.
The greenback hovered around ¥107.70 early in the morning, showing little reaction to weaker-than-expected Japanese gross domestic product data for October-December, as traders were awaiting the release of U.S. consumer price data for January later in the day.
After climbing close to ¥107.90 later in the morning, supported by Japanese importers’ buying, the U.S. currency met with bouts of speculative selling as Tokyo stocks gave up initial gains and turned into negative territory, market sources said.
“The dollar-yen rate is unlikely to stabilize unless Japanese and overseas stock markets calm down,” a major Japanese bank official said.
“The dollar could fall below ¥106 in the short term” after it broke through the 2017 bottom near ¥107.30, an official at a currency margin trading service provider warned.