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Dollar off 14-month low against the yen in Asian trading

Dollar off 14-month low against the yen in Asian trading

The dollar dipped below 112 yen for the first time in over a year before rebounding in Asian trading and floundering in a low range as investors dumped the U.S. currency amid a global tumble in shares.
The dollar was trading at 112.66 yen at 5 p.m. (0800 GMT) Friday in Tokyo after temporarily falling below 112 yen for the first time since June 2006.
In New York overnight, nervous investors sold the greenback to move out of risky yen carry trades, which involve selling the low-yielding yen in favor of higher-yielding dollars. When investors exit the carry trades, they have to buy back yen.
That drove the dollar down to 113.11 yen late Thursday in New York, from almost 117 yen on Wednesday.
"Many players who missed the sudden selling (of dollars for yen) yesterday, are waiting for any rise to sell (dollars) today," said Mizuho Corporate Bank senior dealer Masashi Matsuzawa.
"Players globally are feeling the need to buy the yen now" amid heightening risk-aversion, he said.
The weak dollar clouded the outlook for Japanese exporters, sparking a sell-off in the stock market that sent the Nikkei 225 spiraling down 5.42 percent to 15,273.68 points _ its lowest close in a year.
A weak U.S. currency hurts Japan's giant exporters such as Toyota Motor Corp. and Sony Corp. by reducing the value of their overseas earnings when converted into yen. A weak dollar also makes Japanese exports more expensive abroad.
On the Tokyo Stock Exchange, Toyota was among the day's big losers, tumbling 7.05 percent to 6,200 yen (US$53.80). Game maker Nintendo Co., which relies on overseas sales for much of its revenue, saw its shares plunge 9.67 percent to 46,700 yen (US$405). Sony shares fell 6.83 percent to 5,050 yen (US$43.82).
"For the time being, the yen appreciation will give some negative impact on corporate earnings," said Credit Suisse Chief Strategist Shinichi Ichikawa. "But generally, I can say earnings are continuing to grow at Japanese companies."
The 13-nation euro traded higher against the dollar, to US$1.3414 in Tokyo from US$1.3405 overnight in New York.
The dollar was also higher against most other Asian currencies, rising 5.29 percent against the Thai baht to 34.470, up 0.34 percent against the Singapore dollar to 1.5396, and 0.59 percent higher against the South Korean won at 951.6.
The dollar fell 0.06 percent against the Hong Kong dollar to 7.8149.


Updated : 2021-10-20 12:47 GMT+08:00