Tokyo - Japan’s currency was on a roller coaster ride in Asia on Monday as news that the country had slumped into recession initially pushed the yen to a seven-year low before it quickly reversed course.
In Tokyo, the yen fell below 117 against the dollar for the first time since October 2007 just minutes after official data showed Japan's economy dropped into a recession after a second-straight quarter of contraction.
It was the biggest jolt to the unit since the Bank of Japan's monetary easing expansion on October 31, but the fresh round of yen selling was short lived.
It quickly rose to 115.74 on the dollar in midday trade, from 116.26 in New York on Friday afternoon.
The euro weakened to 145.39 yen from 145.66 yen in US trade, while it firmed to $1.2573 from $1.2523.
Japan's surprisingly poor third-quarter GDP data pushed Tokyo stocks down 2.59 percent by the break, with the negative sentiment prompting a move to the yen, which is seen as a safe-haven currency in times of uncertainty or turmoil.
The dollar-yen rate has jumped sharply over the past two months and “all factors (to push the yen down) are out now,” said Daisuke Karakama, head of currency spot trading at Mizuho Bank.
Japan's gross domestic product shrank 0.4 percent in the July-September quarter, or an annualised rate of 1.6 percent, as a tax rise earlier this year slammed the brakes on growth.
Analysts said the shock data made it almost inevitable that Prime Minister Shinzo Abe will delay a fresh sales tax hike and call snap elections to bolster his power against party rivals.
Karakama noted, however, that a snap election was likely “no matter what the numbers were”.
“The overall story has not changed since last week,” he added. - AFP