News Column

Dollar rises in upper 101 yen on Tokyo stocks' rebound

June 13, 2014

Mai Iida

The U.S. dollar rose in the upper 101 yen range Friday in Tokyo as a rebound in Tokyo stocks sapped demand for the perceived safety of the yen, while the Bank of Japan's decision to keep its monetary policy steady had little impact on the market.

At 5 p.m., the dollar fetched 101.82-83 yen compared with 101.66-76 yen in New York and 102.07-08 yen in Tokyo at 5 p.m. Thursday. It rose as high as 102.10 yen briefly after hitting the day's low of 101.66 yen, while changing hands most frequently at 101.80 yen.

The euro was quoted at $1.3574-3575 and 138.21-25 yen against $1.3546-3556 and 137.81-91 yen in New York and $1.3532-3533 and 138.12-16 yen in Tokyo late Thursday afternoon.

The dollar recovered much of the ground it lost overnight on tepid U.S. data, such as weaker-than-expected retail sales for May and an unexpected rise in initial claims for unemployment benefits last week, as well as on worries over rising tension in Iraq.

The market showed muted reaction to the BOJ's announcement shortly before noon that it had decided at its two-day policy meeting through Friday to hold monetary policy steady, as it was widely expected.

But once Tokyo shares showed strength in the afternoon, with the 225-issue Nikkei Stock Average erasing early losses to finish near its day's high, investors' risk appetite rose and the safe-haven yen lost ground both against the dollar and the euro.

"The Nikkei turned around and rose sharply in the afternoon. I think the firmness of the stock market is the biggest factor behind the (dollar's brief) retake of the 102 yen line," said a senior dealer at a major Japanese bank.

The dollar's rise, however, lost momentum somewhat in the late afternoon as BOJ chief Haruhiko Kuroda's remarks at a press conference after the policy meeting contained no surprises, the senior dealer said.

Kuroda said the BOJ will not end its ultraloose monetary policy before achieving its 2 percent inflation goal.

Market players remained wary about rising tensions in Iraq. U.S. President Barack Obama on Thursday warned of possible military intervention given the growing radical Islamist insurgency in the northern Iraqi city of Tikrit.

"With concerns rising about Iraq, we need to keep an eye on developments over the weekend," Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow, said, noting that a rise in a risk-averse mood would underpin the safe-haven yen.

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Source: Japan Economic Newswire

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