The U.S. dollar touched a fresh postwar low of ¥76.25 Thursday in Sydney, far below its previous record low of ¥79.75 marked in April 1995, on massive yen buying by risk-averse investors amid speculation that Japanese companies may sell dollar-denominated funds for the yen following the devastating earthquake and worsening nuclear crisis in Japan.
In the Thursday morning trading in Tokyo, the dollar rebounded from the level and traded in the lower ¥79 range. At 9 a.m., the dollar was quoted at ¥79.15-17 versus ¥79.55-65 in New York and ¥80.92-94 in Tokyo late Wednesday.
In New York on Wednesday, the dollar quickly lost ground to the mid-¥76 level on growing global economic uncertainties arising from Japan's disaster and also sharp drops in U.S. stock prices, breaking the 1995 postwar low.
The dollar fell below the ¥80 line shortly after 12 p.m. Wednesday, as New York stocks expanded losses on reports that a senior European Union official said the crisis at the quake-hit Fukushima nuclear power plant in Japan is effectively out of control, dealers said.
After breaking the 1995 low, the U.S. currency rapidly plunged into the ¥76 yen range.
Caution will likely grow against possible intervention by Japanese monetary authorities to stop the yen's appreciation as a stronger yen would deal a blow to the profitability of Japanese exporters, adding pressure to the Japanese economy already dealing with catastrophe, dealers said.
Some expect the yen in the longer term to face selling due to uncertainties over the outlook of Japan's economy, dealers said, noting that the yen's recent jumps are attributable to special factors associated with the disaster.
The dollar hit the April 1995 low against the yen after the Great Hanshin Earthquake in January that year.
The U.S. currency then gradually regained ground to briefly reach the ¥140 zone in 1998, when the Japanese financial sector was rocked by nonperforming loans.
The dollar has been sold for the yen since around 2008 following the U.S. financial crisis.
The Japanese government stepped into the market by selling the yen in September last year for the first time in about six and a half years after seeing the dollar drop into the ¥82 range.
Despite the market intervention by Japan, the dollar further declined to ¥80.21 last November.
©japantimes.co.jp
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