The dollar was firmer above ¥112 in Tokyo Wednesday after European Central Bank President Mario Draghi’s comments sparked speculation about possible tapering of the bank’s massive monetary stimulus.
At 5 p.m., the dollar stood at ¥112.14-15, up from ¥111.63-63 at the same time Tuesday. The euro was at $1.1378-1378, up from $1.1187-1187, and at ¥127.60-60, up from ¥124.88-89.
The dollar held firm in early Tokyo trading after rising to around ¥112.50 overseas on higher European and U.S. long-term interest rates following Draghi’s hawkish comments.
“Deflationary forces have been replaced by reflationary ones,” the ECB chief said in a speech in Portugal on Tuesday, sparking a view that the bank may start winding down its monetary stimulus, traders said.
After moving narrowly around ¥112.10 for much of the day, the dollar attracted purchases mainly from European traders in late trading, temporarily rising above ¥112.40, according to the traders.
But the greenback cut gains just before 5 p.m. due to selling on a rally, they also said.
Speculation about tighter U.S. and European monetary policies are intensifying, while in Japan, no signals of such a policy shift have emerged.
The yen may fall prey to selling if Bank of Japan Gov. Haruhiko Kuroda remains dovish in a speech later on Wednesday, said an official of a foreign exchange margin trading service firm.