Dollar Plunges to Record Low, Stocks Gain
TOKYO (AP) _ The dollar plunged to a record low closing against the Japanese yen Wednesday, while Tokyo stock prices climbed despite the threat the rising yen poses to this nation’s foreign sales.
The dollar closed at 108.65 yen, down 1.91 yen from Monday’s finish and its lowest close in Tokyo since modern exchange rates were set in the late 1940s. The previous record was 110.10 yen on May 7. The dollar now has fallen 13.1 percent since Feb. 2.
After opening at 109.17 yen, it ranged as low as 108.63 yen and as high as 109.21 yen.
Dealers said there was little apparent effect from rumors that the Bank of Japan had intervened to support the dollar. Japan’s central bank does not comment on its market activities.
The dollar had plunged in New York overnight after a report by the Clinton administration to Congress was widely interpreted as approval of a higher yen as a way to combat the U.S. trade deficit. A stronger yen makes Japanese products more expensive and less competitive overseas.
The report came one day after remarks by Commerce Secretary Ron Brown renewed the Clinton administration’s concern about America’s $50 billion trade deficit with Japan.
Shin Kobayashi, a Daiwa Bank dealer, said trading was nervous as the dollar hit the 109-yen level.
″Investors are reluctant to make major shifts at this level because they would rather wait and see how far the dollar may fall,″ he said.
On the Tokyo Stock Exchange, the 225-issue Nikkei Stock Index gained 264.33 points, or 1.28 percent, closing at 29,895.99. On Tuesday, it had gained 155.60 points, or 0.76 percent.
The Tokyo Stock Price Index of all issues listed on the first section gained 21.43 points, or 1.3 percent, closing at 1,639.72. It had gained 7.60 points, or 0.5 percent, the previous day.
Volume on the first section was estimated at 470 million shares, up from 436.97 million Tuesday. Gains outnumbered declines 743 to 292, while 152 issues were unchanged.
Traders said there was little evidence that the yen’s surge in value had led investors to dump the shares of exporters, even though it will hurt their competitiveness overseas.
But the dollar’s sharp fall has raised expectations in Tokyo that the Japanese government may further ease interest rates. Lower yields elsewhere would tend to boost investment in the stock market.
The benchmark 10-year Japanese government bond was quoted at 105.75 yen up 0.52 yen. Its yield was down 0.080 percentage points to 4.580 percent.