The dollar dropped below ¥106 at one point in Tokyo trading Wednesday, pressured by a fall in the Nikkei stock average and a steep interest rate cut by New Zealand.
At 5 p.m., the dollar stood at ¥106.29-30, down from ¥106.36-36 at the same time Tuesday. The euro was at $1.1189-1189, down from $1.1214-1214, and at ¥118.94-94, down from ¥119.27-28.
The dollar met with selling after the opening of the Tokyo stock market as investors were disappointed at the Nikkei stock average’s continued fall despite a rebound on Wall Street Tuesday.
Following the Chinese central bank’s setting of the yuan’s reference rate at a level slightly higher than a prevailing market rate, however, a sense of relief spread among participants to lift the greenback back above ¥106.30, traders said.
But the U.S. currency slid through ¥106 early in the afternoon on selling prompted by a fall in the New Zealand dollar, which was battered by an aggressive 0.5 percentage-point rate reduction by the Reserve Bank of New Zealand.
The cut was “bigger than expected,” an official at a foreign exchange margin trading service firm said.
In late trading, the dollar moved in a narrow range in the dearth of fresh trading incentives.
Concerns over an escalation of a currency war between the United States and China waned, a currency broker said.
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