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Dollar Jumps, Stock Prices Decline in Early Trading

June 12, 1989

TOKYO (AP) _ The dollar rose sharply against the Japanese yen in Tokyo Monday, while stock prices plunged.

On the Tokyo Stock Exchange, the 225-issue Nikkei Stock Average shed 241.97 points, or 0.72 percent, closing at 33,398.01. The index lost 78.31 points on Friday.

The dollar ended trading at 148.40 yen, up 4.90 yen from Friday’s close of 143.50 yen. Monday’s closing rate was the highest since Aug. 18, 1987, when the dollar finished at 148.55 yen.

After opening sharply higher at 147.60 yen, the U.S. currency ranged between 147.35 and 148.45 yen during the day.

″The dollar’s surge is blamed totally to a steep rise in U.S. wholesale inflation,″ said Naoto Kawamura, a senior dealer with the Bank of Tokyo.

The U.S. Labor Department reported Friday the nation’s wholesale prices for May surged 0.9 percent, a sharper rise than 0.4 percent that many economists had predicted. It followed moderate rises of 0.4 percent both in March and April.

″The (wholesale) index dashed the prospect that the (U.S.) Federal Reserve Board would ease its monetary policy further, at least for the time being,″ Kawamura said.

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