The dollar dived below ¥108 for the first time in about 10 months in Tokyo trading on Friday, as a risk-averse mood grew amid heightened worries about the possibility of North Korea firing a ballistic missile, or conducting other provocations, on Saturday, the anniversary of the reclusive nation’s founding.
At 5 p.m., the dollar stood at ¥107.73-74, down from ¥108.99-109.00 at the same time Thursday. The euro was at $1.2048-1.2049, up from $1.1954-1.1954, and at ¥129.81-82, down from ¥130.30-30.
The dollar was weak around ¥108.30 in early trading in the wake of an overnight tumble of the key U.S. long-term interest rate on concerns over Hurricane Irma’s possible devastation on the U.S. economy and the European Central Bank’s downward revision in its inflation forecasts on Thursday.
The benchmark 10-year U.S. Treasury yield fell in line with long-term interest rates in Europe after ECB President Mario Draghi suggested that the central bank may decide to start reducing its bond-buying program at a policy-setting meeting next month, market sources said.
After resisting falling further thanks to buying from real demand-backed players, the dollar plunged below ¥108 in the midafternoon.
“Speculative selling of the dollar triggered stop-loss orders,” a currency broker said.
Meanwhile, a think tank official pointed out that investors could increasingly become reluctant to buy the yen against the dollar further. “But if North Korea fires a missile over Tokyo, the dollar could slip through the ¥107 line,” a major securities firm official said.