By Hiroyuki Kachi
The dollar lost 0.4% against the yen Tuesday, as a lackluster
Tokyo stock market and jaw boning by a Japanese government adviser
took the legs from the greenback's overnight rally, pushing it
below the Y120 mark.
Around 0450 GMT, the dollar was at Y119.63 after reaching as
high as Y120.27 midmorning. That compared with Y120.15 late Monday
in New York.
"We wish we could have seen the (Nikkei) stock average breaking
through the 19000 mark," said a senior Japanese bank dealer, noting
that the Nasdaq Composite climbed above the 5000-point level for
the first time in almost 15 years Monday.
But petering momentum in the Japanese shares put downward
pressure on the greenback, helping drag it as low as Y119.58. The
benchmark Nikkei index was down 0.2% at 18794.94 midday.
"I don't feel the dollar-yen trade pair has any moving
initiatives of its own," said Kyosuke Suzuki, head of FX and money
market sales department at Societe Generale in Tokyo. Instead, the
dollar-yen seems largely dependent on other factors such as stock
market movements, he added.
Market participants also cited comments by an economic adviser
to Prime Minister Shinzo Abe as a factor that gave an extra slide
to the dollar against the yen.
Etsuro Honda told The Wall Street Journal that he was skeptical
the dollar had potential to rise further from its current levels
around Y120 against the yen. Mr. Honda also said Japan's central
bank should hold fire on extra easing measures for some time to
ensure the economy doesn't "overheat."
"The market has become nervous about comments by major
government figures," said Mr. Suzuki.
The Japanese bank dealer said the dollar's falloff looks only
temporarily, as money continues to flood into the stock markets
amid global monetary easing--a situation that is set to continue
for a while.
"The dollar-yen pair looks set to ratchet up," but as the U.S.
currency lacks the kind of momentum against the Japanese currency
it showed from late October last year, any upward moves will likely
take place slowly, with the pair eventually reaching Y121.50 or
more in April or May, the dealer added.
Meanwhile, the Australian dollar strengthened after the Reserve
Bank of Australia's decision to keep its benchmark interest rate
unchanged at a record low 2.25% to avoid stoking an overheating
housing market that risks derailing a fragile economic
recovery.
The Aussie rose to Y93.64 from Y93.33 and gained to $0.7826 from
$0.7769.
The euro was at $1.1200 from $1.1181, while the common currency
was at Y133.95 from Y134.40.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was down 0.27% at 86.02.
Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 119.62-63 120.13-14 -0.42 120.27 119.59 -0.08
EUR/USD Euro 1.1197-200 1.1183-86 +0.13 1.1201 1.1177 -7.44
GBP/USD U.K. 1.5380-85 1.5362-67 +0.12 1.5383 1.5356 -1.26
USD/CHF Switzerland 0.9559-63 0.9583-87 -0.25 0.9588 0.9558 -3.84
USD/CAD Canada 1.2512-17 1.2534-39 -0.18 1.2545 1.2513 +7.68
AUD/USD Australia 0.7825-29 0.7763-67 +0.80 0.7842 0.7752 -4.21
NZD/USD New Zealand 0.7540-46 0.7507-13 +0.44 0.7547 0.7502 -3.23
Euro Rates
EUR/JPY Japan 133.95-99 134.31-35 -0.27 134.44 133.88 -7.57
Source: ICAP PLC
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com