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Dollar, Stock Prices Fall

July 22, 1988

TOKYO (AP) _ The dollar and stock prices declined sharply in Tokyo today after steep falls in New York overnight.

The dollar, which lost 2.20 yen in New York Thursday, declined 1.42 yen to finish the week at 132.08 yen in Tokyo.

Traders said the U.S. currency stayed within a range of 131.63-132.20 yen in slow trading.

On the Tokyo Stock Exchange, the Nikkei Stock Average of 225 selected issues, which soared 404.95 points on Thursday, retreated 391.13 points, or 1.41 percent, today to close at 27,285.01.

It was the worst single-day decline in the Nikkei since Tuesday, when the index plunged 513.03 points. In the previous worst single-day loss, the Nikkei average lost 394.35 points on May 19.

Volume traded on the market’s first section was 1.7 billion shares, compared to 1.8 billion the day before.

A Bank of Japan official attributed the dollar’s sharp decline to ″the impact of cooperative intervention by central banks,″ according to Kyodo News Service.

Tuesday’s reported intervention by the Bank of Japan to stop the fall of the West German mark was seen as a sign of determination by central banks to stabilize exchange rates.

Exchange dealers attributed the dollar’s downturn in Tokyo directly to the sharp overnight drop in New York.

″I don’t see any outstanding factor in Tokyo which could bring down the dollar,″ said a dealer at a major U.S. investment bank in Tokyo.

Other dealers said investment banks actively sold the dollar in early morning trading following its decline in New York, causing the dollar’s fall.

After opening at 131.85 yen, the U.S. currency regained the 132-yen level at late morning when news reports quoted Finance Minister Kiichi Miyazawa as saying the yen’s sudden appreciation was not significant, dealers said.

Brokers attributed the decline in share prices to a 24-point fall in the Dow Jones industrial average on Wall Street overnight.

″The market as a whole is down but particular shares, mostly large capital issues, have been barely holding the index up during the past few weeks,″ said Keiichi Nishida of Kidder Peabody. ″So when those large shares like steels, shipbuildings and electronics fall, the Nikkei index plunges as if something very serious happened.″

Nishida said major Japanese securities companies, including Nomura, Daiwa, Yamaichi and Nikko Securities, were encouraging investors to buy large capital issues to keep the market index up.

″The exchange’s index does not necessarily reflect the real market situation in Japan, unlike on Wall Street,″ he said.

Meanwhile, workers at the Tokyo Stock Exchange went on an hour-long strike this morning to protest the exchange’s proposal to extend dealing hours by half an hour.

Trading was not affected by the strike, however, as managerial workers filled in, dealers said.

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