Dollar Drops, Stocks Fall in Morning Trading
TOKYO (AP) _ The dollar fell sharply against the Japanese yen in Friday morning trading, while prices on the Tokyo Stock Exchange fell to the lowest morning close of the year.
The dollar closed the morning trading session at 140.70 yen, down 0.95 yen from Thursday’s close. But the morning close was up from the opening rate of 140.40 yen.
It was the dollar’s lowest opening since Oct. 16, 1989, when the currency opened at 139.95 yen.
The Nikkei Stock Average of 225 selected issues dropped 314.03 points or 1.32 percent to close the morning session at 23,497.88 points. It was the lowest level for a session close and the lowest intraday level this year. The index lost 266.43 points Thursday.
In bond dealings, the yield of the benchmark No. 119 10-year Japanese government bond edged up to 8.300 percent, from Thursday’s close of 8.245 percent. The price stood at 82.25 points, down from 82.48.
Currency dealers said the dollar’s low opening followed its downswing in New York over speculation about U.S. interest rates.
But short-covering pulled the dollar back from the brink of the psychological barrier of 140 yen, said Tadashi Sazaki, assistant general manager of the foreign exchange division of the Mitsui Taiyo Kobe Bank.
Analysts said the market’s attention is focused on the U.S. Labor Department’s release Friday of unemployment statistics for August. Traders believe the U.S. Federal Reserve Board will respond by pushing interest rates lower to give the economy a boost.
Kan Sugita, a dealer with the Bank of Tokyo, said the early dollar trading was brisk in both buying and selling. ″But I don’t think the dollar will soon move below the 140-yen level″ before the release of the unemployment data, Sugita said.
The stock market started slowly with mixed small-lot buying and selling in a favorable reaction to the yen’s appreciation against the dollar, though some investors remained cautious against rising oil prices and a decline on Wall Street, dealers said.
″Every investor is very, very negative,″ said Hidetada Yoshida of Kidder Peabody. Traders are worried about what kind of a deal might be cut at the weekend summit of President George Bush and Soviet leader Mikhail Gorbachev. Arbitrage trading and the rapid fall on the bond market, heralding higher interest rates, also drove the market down, he said.