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Dollar at Highest Level Against Yen in Two Years

January 24, 1996

TOKYO (AP) _ The dollar rose to its highest level against the Japanese yen in nearly two years today after the government reported that Japan’s trade surplus shrank last year.

Stock prices ended higher after a brief slip by the key Nikkei index below the 20,000-point level.

At 3 p.m., the dollar was changing hands at 106.28 yen, up 0.64 yen from late Tuesday in Tokyo and also above an overnight quote of 105.84 yen in New York.

The dollar last traded this high in March, 1994.

The dollar was boosted by the news that Japan’s overall trade surplus fell 11 percent last year, and that its surplus with the United States fell 17 percent, said Tamotsu Kawamoto, a Tokai Bank trader.

The dollar also was supported by growing anticipation for a possible cut in German interest rates, Kawamoto said.

On the stock market, the 225-issue Nikkei Stock Average rose 231.82 points, or 1.15 percent, closing at 20,312.74 after briefly slipping below the 20,000 level for the first time since Jan. 4.

On Tuesday, the average had shed 115.61 points, or 0.57 percent.

Traders attributed the morning slip to selling by foreign investors on growing uncertainties about the Japanese government’s plan to bail out the nation’s failed housing lenders.

But futures-led buying in the afternoon _ especially in banking shares, which have a heavy weighting in the Nikkei _ helped push the benchmark index higher, traders said.

Volume on the exchange’s first section was estimated at 370 million shares, down from Tuesday’s 433 million. Retreating issues narrowly outnumbered advancers 528 to 510, with 168 unchanged.

The Tokyo Stock Price Index of all issues listed on the first section was up 9.53 points, or 0.61 percent, to 1,573.63. The TOPIX had lost 6.29 points, or 0.40 percent, the day before.

At 3 p.m., the benchmark No. 174 10-year Japanese government bond was sold at 111.18 yen, down 0.08 yen from Tuesday’s close. The yield rose to 2.970 percent from 2.960 percent.

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