The dollar traded firmly around ¥110.70 in Tokyo trading late Wednesday, buoyed by real demand-backed buying, although down from midday highs.

At 5 p.m., the dollar stood at ¥110.72, up from ¥110.22 at the same time Tuesday. The euro was at $1.1731, down slightly from $1.1735, and at ¥129.89, up from ¥129.35.

The dollar climbed above ¥110.90 in the morning on a wave of buying by Japanese importers for settlement purposes before the end of the fiscal year the same day, as well as due to a rise of U.S. long-term interest rates in off-hours trading.

Dollar purchases slowed down in the afternoon, however, as market players took to the sidelines ahead of U.S. and European economic data releases and the announcement of U.S. President Joe Biden’s infrastructure spending package later on Wednesday.

The greenback eased in late trading, due to the effects of European currencies being bought back after weakening recently.

“(The dollar-yen rate) is rising at a fast pace, and there is a sense of overheating,” an official at a bank-affiliated securities firm warned.

Meanwhile, a currency broker expressed worries about the impact on market sentiment of major financial institutions around the world possibly suffering major losses related to transactions with a U.S. hedge fund.

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