TOKYO, Feb. 19 (Kyodo) — The U.S. dollar trimmed sharp overnight gains above 107 yen and mostly traded around the mid-106 yen level Thursday morning in Tokyo on selling by Japanese exporters.
At noon, the dollar was quoted at 106.65-67 yen, compared with 106.70-80 yen in New York at 5 p.m. Wednesday and 105.57-60 yen in Tokyo at 5 p.m. Wednesday.
It moved between 106.30 yen and 106.77 yen during the morning.
”The dollar briefly dropped to 106.30 yen from an early high of 106.77 yen, which was a (high) level not seen for a long time for exporters,” said Tatsuro Karitani, a foreign exchange manager at Mizuho Corporate Bank.
But the dollar recovered to around 106.70 yen at one stage later in the morning on buybacks believed to have come from hedge funds based in the United States and Middle East, dealers said.
The early selling followed the dollar’s rise to a one-month high of 107.15 yen overnight in New York.
Dealers said the dollar’s sudden spike against the yen was a chain reaction to the euro’s wild fluctuations against the dollar.
First, the single European currency rose to $1.2930 in London on Wednesday, its highest level since the currency’s introduction in 1999.
But its rise above the $1.29 line created ”a sense of accomplishment” among currency market players who have bid up the euro over the past several months, dealers said. The single currency subsequently came under fierce selling pressure, plunging to $1.26 levels by late New York trading.
Meanwhile, the dollar, which started the New York session around 105.70 yen, jumped by a yen and a half to touch 107.15 yen later in the session on buying associated with the dollar’s sharp rebound against the euro.
But dealers said maybe not all of the dollar’s buying against the yen stemmed from the shrinking euro gains. Japanese monetary authorities might have secretly jumped on the bandwagon to depreciate the yen, they said.
