Yen Range-Bound Against Dollar Amid Rising Oil Prices

The yen traded in the lower 153 range against the dollar in Tokyo foreign exchange market on October 10th. As of 5:00 p.m., the yen stood at 153.40-42 per dollar, down 29 sen from the previous day.

Behind the yen's selling was a rise in U.S. long-term interest rates and expectations that the Japan-U.S. interest rate differential would widen, making dollar buying and yen selling the dominant trade. Additionally, rising crude oil prices weighed on the yen, with concerns over Japan's deteriorating trade balance strengthening speculation that importers would sell yen and buy dollars.

Market participants noted that dollar buying momentum is currently limited, citing speculation that Japanese real-demand players had already placed large volumes of yen-selling, dollar-buying orders when coordinated intervention was conducted by the Japanese and U.S. governments. The yen could have weakened further, but yen-buying pressure was strong.