Yen Extends Decline Against Dollar and Euro in Tokyo Trading

The Japanese yen continued its downward trend against the US dollar in Tokyo trading on October 7, reaching the mid-158 range. As of 10:00 a.m., the dollar-yen pair was trading at 158.45-46 yen, a decline of 35 sen from the previous evening. The yen's weakness was driven by euro buybacks, which spurred yen selling and spilled over into the dollar-yen market. A foreign exchange dealer at a Japanese bank noted that "dollar buying was dominant" ahead of the benchmark fixing.

The yen also weakened against the euro, with EUR/JPY at 178.21-23 yen, a 50-sen drop from the previous evening. Throughout the morning, the dollar-yen pair fluctuated between 158.05 and 158.49 yen, while EUR/JPY ranged from 177.93 to 178.31 yen. The euro faced challenges against the dollar, trading near $1.1247, with market participants adopting a wait-and-see approach due to lingering concerns over France's fiscal management.

The yen's decline was further supported by real-demand flows, with Japanese importers actively selling yen and buying dollars. This trend, combined with the euro's strength, highlighted broad-based yen weakness. Market observers attribute the persistent yen-selling pressure to the interest rate differential between Japan and the United States.