The yen inched up to the lower 160 range against the U.S. dollar Thursday in Tokyo after tumbling to a 37-year low overnight, as repeated warnings by Japanese authorities heightened fears over another market intervention.
The Japanese currency hit 160.88 versus the dollar in New York, its lowest level since December 1986, after dropping past 160.24 logged on April 29, a level that likely prompted Japan to conduct a yen-buying operation to arrest its decline.
At 3 p.m., the dollar fetched 160.40-43 yen compared with 160.78-88 yen in New York and 159.89-91 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.0693-0697 and 171.52-61 yen against $1.0675-0685 and 171.64-74 yen in New York and $1.0693-0695 and 170.98-171.02 yen in Tokyo late Wednesday afternoon.
The yen has been facing selling pressure against the dollar amid speculation that the Federal Reserve is likely to keep interest rates elevated for longer than anticipated, as recent U.S. economic data indicated a solid economy.
But the currency's further slide was prevented in Tokyo, as Finance Minister Shunichi Suzuki said the government will take "necessary" action if needed, following a similar warning by Japan's top currency diplomat Masato Kanda on Wednesday evening.
"Rapid and one-sided movements are undesirable," the finance minister said Thursday, adding he has "strong concerns" about the impact of the yen's depreciation on the economy.
While the warnings have kindled wariness, some market participants believe authorities may find it more difficult to step in after the United States put Japan back on its currency manipulator watch list last week, dealers said.
"Japanese authorities may also be reluctant to step in again as the effects of the previous interventions lasted just two months," said Yuzo Sakai, chief manager of business planning at Ueda Totan Forex Ltd.
"There is no certainty as to when there may be one, with predictions ranging through to 165 per dollar," he added.
Declines in the stock market additionally prompted buying of the yen, perceived as a safe-haven asset, dealers said.
The yen also plunged against the euro overnight, hitting 171.79, its lowest level since the European currency was introduced in 1999.
Stocks dropped on Thursday as investors locked in gains a day after the Nikkei index climbed more than 1,000 points over three trading days.
The 225-issue Nikkei Stock Average ended down 325.53 points, or 0.82 percent, from Wednesday at 39,341.54. The broader Topix index finished 9.25 points, or 0.33 percent, lower at 2,793.70.
On the top-tier Prime Market, decliners were led by mining, rubber product, and securities house issues.
