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Dollar, Stocks Fall

June 1, 1992

TOKYO (AP) _ Continued aggressive intervention by Japan’s central bank pushed the dollar to a nearly four-month low against the Japanese yen today, while share prices fell in thin trading on the Tokyo Stock Exchange.

The dollar closed at 126.78 yen, down 1.55 yen from last Friday’s close and also below Friday’s New York finish of 127.60 yen. It was the dollar’s lowest closing in Tokyo since 125.35 yen on Feb. 10.

After opening at 127.15 yen, it ranged between 126.65 yen and 127.15 yen. Spot trading totaled $4.53 billion, down from Friday’s $13.54 billion. The dollar has fallen 3.14 yen in two trading days.

Traders said the central bank’s dollar-selling came as sentiment turned against the dollar following a Commerce Department report Friday that the U.S. economy grew at a weaker-than-expected rate in this year’s first quarter.

Japan wants a stronger yen to help reduce its huge surpluses with major trading partners. A stronger yen tends to make Japanese exports more expensive aboard, while making foreign goods cheaper for Japanese consumers.

Shinji Mifune, a dealer with Fuji Bank, said the Bank of Japan sold dollars in the morning when the dollar was trading at 127.05 yen, and intervened again in the afternoon.

He said the central bank appeared to seek a level of around 125 yen for the dollar, but many traders were buying dollars at 126.65 yen and below.

It was the third consecutive trading session in which the central bank had intervened in the Tokyo market, Mifune and other dealers said. The bank does not comment on its intervention.

The 225-issue Nikkei Stock Average fell 343.64 points, or 1.87 percent, closing at 18,004.11. On Friday, the average rose 416.50 points, or 2.32 percent.

The Tokyo Stock Price Index of all issues listed on the first section, which gained 20.02 points, or 1.47 percent, on Friday, fell 15.78 points, or 1.14 percent, to 1,360.54.

An estimated 180 million shares changed hands, down from Friday’s 240 million. Declining issues outnumbered advances 650 to 303, with 161 issues unchanged.

Stock dealers said firming bond prices and the higher yen helped the Nikkei average gain moderately in the morning, but arbitrage selling pushed it back down.

In arbitrage trading, investors seek profits from price differentials between the spot and futures markets.

Shigeki Sato, an analyst with Okasan Securities, said the afternoon decline came on investors’ concerns over the special quotation for June futures contracts on June 12.

The benchmark No. 129 10-year Japanese government bonds closed at 104.89 points, up from Friday’s 104.87-point finish. Their yield fell to 5.500 percent from 5.505 percent.

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