The dollar fell to seven-month lows below ¥106 during Tokyo trading hours Monday as buying of the safe-haven currency gathered steam amid heightened fears about an escalation of the U.S.-China trade conflict.
At 5 p.m., the dollar stood at ¥105.94-94, down from ¥106.91-91 at the same time Friday. The euro was at $1.1130-1130, up from $1.1112-1113, and at ¥117.92-92, down from ¥118.81-81.
The dollar dropped close to ¥105.80 in midmorning amid investors boosting selling of the U.S. currency and other risk assets such as equities in preparation for a global economic slowdown due to the prolonged U.S.-China trade war.
The dollar’s sharp drop against the yen pushed the Nikkei 225 average to go south and the key stock price index’s plunge sparked further selling of the greenback, traders said.
In the afternoon, the dollar showed some resilience thanks to buybacks prompted partly by media reports that the Finance Ministry, the Bank of Japan and the Financial Services Agency held a meeting in the wake of the dollar’s tumble vis-a-vis the yen, they said.
The Chinese yuan’s drop to 7 to the dollar, the lowest level in about 11 years, “made investors worry about a resulting capital flight from China, giving a boost to their moves to dump risk assets,” an official of a foreign exchange margin trading service firm said.
“Players have now been focusing on actions and comments regarding U.S.-China trade by U.S. President Donald Trump and other key figures,” said a domestic bank official.