The U.S. dollar fell sharply against the yen Thursday in New York, briefly dropping to the lower 157 yen range for the first time since mid-June, after data showing a lower-than-expected U.S. consumer price index fueled hopes for early rate cuts by the Federal Reserve.
After plunging to 157.40 in the morning, however, the dollar soon rebounded to hover in the upper 158 yen range. It was quoted at 158.83-93 at 5 p.m. in New York, compared with 161.62-64 yen late Thursday in Tokyo.
The CPI unexpectedly fell in June, with a 0.1 percent decline from May and an increase of 3.0 percent from a year earlier, the Labor Department said.
The mild inflation report led to a decline in U.S. long-term interest rates, with the dollar falling to around a three-week low against the yen on prospects of a narrowing interest rate differential.
The yen has depreciated to 37-year lows due to the persistent wide interest rate gap between the United States and Japan. Recent gains in stocks have also prompted traders to sell the Japanese currency, which is seen as a safe-haven asset.
Japanese officials have been expressing concern about the yen's depreciation. Asked about the dollar's drop Thursday by some 4 yen, Japan's top currency diplomat Masato Kanda told reporters he would not comment on whether authorities intervened in the currency market.
The Japanese Finance Ministry spent over 9 trillion yen ($57 billion) between April 26 and May 29 to slow the yen's rapid fall against the dollar.
