Dollar Dips to Seven-Month Low, Weighing on Tokyo Stocks

The U.S. dollar experienced a decline, reaching a seven-month low in the upper 140 yen range on Monday morning. This drop was attributed to speculation that the United States might encourage Japan to take action regarding the yen's weakness against the dollar.

The strengthening of the yen triggered a sell-off in Tokyo stocks, particularly among export-oriented companies in the automotive and machinery sectors. A stronger yen negatively impacts exporters by reducing their profits when they convert overseas earnings back into their local currency.

The dollar's decline occurred ahead of an anticipated meeting later in the week in Washington between U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Katsunobu Kato.

At midday, the dollar was trading at 140.78-79 yen, a decrease from 142.16-26 yen in New York and 142.39-40 yen in Tokyo on Friday afternoon. The euro was also affected, quoted at $1.1503-1506 and 161.94-99 yen, compared to its previous values in New York and Tokyo.

Further pressure on the dollar stemmed from comments made by U.S. President Donald Trump, who has been advocating for the Federal Reserve to lower interest rates. His remarks, which included a statement about the current Fed Chair, raised concerns about the central bank's independence, leading to dollar selling, according to a currency broker.

In the equities market, energy-related stocks also saw a decrease, influenced by a decline in the key U.S. oil futures contract. The Nikkei Stock Average fell by 429.93 points, or 1.24 percent, closing at 34,300.35. The broader Topix index also declined, dropping 30.14 points, or 1.18 percent, to 2,529.01.