The U.S. dollar stayed firm in the mid-161 yen range Tuesday morning in Tokyo after hitting a fresh 37-year high overnight, supported by rising U.S. Treasury yields that reinforced the prospect of a persistent wide interest rate gap between the United States and Japan.
At noon, the dollar fetched 161.60-63 yen compared with 161.44-54 yen in New York after hitting 161.72 yen, its highest since December 1986, and 161.01-03 yen in Tokyo at 5 p.m. Monday.
The euro was quoted at $1.0735-0736 and 173.48-53 yen against $1.0735-0745 and 173.40-50 yen in New York and $1.0754-0756 and 173.16-20 yen in Tokyo late Monday afternoon. The yen briefly sank to 173.68 against the euro overnight, its lowest level since the European currency was introduced in 1999.
The dollar remained solid amid growing speculation that U.S. inflation will accelerate again if former President Donald Trump returns to office and implements policies such as imposing higher tariffs on China and increasing government spending to boost the economy, dealers said.
"The market is pricing in higher U.S. inflation, as such tariff and tax-related policies will lead to fiscal deterioration and rising interest rates," said Yuzo Sakai, chief manager of business planning at Ueda Totan Forex Ltd.
But the dollar's further rise was limited in Tokyo due to wariness over a possible yen-buying intervention by Japanese authorities aimed at arresting the yen's rapid decline, Sakai added.
Stocks were higher in the morning, led by financial issues, as rising Japanese long-term interest rates raised hopes for improved profits and export-related issues were sought on the yen's depreciation.
The 225-issue Nikkei Stock Average rose 149.52 points, or 0.38 percent, from Monday to 39,780.58. The broader Topix index was up 21.93 points, or 0.78 percent, at 2,846.21.
