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Tokyo Stocks Decline

January 6, 1998

TOKYO (AP) _ The dollar rose further against the yen Tuesday despite market intervention by the Japanese central bank and warnings from finance officials. Stocks fell.

The dollar stood at its highest level in over 5 1/2 years as Japanese investors sold their own currency because of mounting concerns over the economy in Japan as well as its troubled Asian neighbors.

The dollar bought 133.86 yen in midday trading, up 1.02 yen from late trading in Tokyo on Monday. It also rose from its late New York level overnight of 133.78 yen.

Traders believe the Bank of Japan sold dollars for yen just above 134 yen. The dollar briefly fell by about 1.50 yen.

But the market’s yen-selling drive was so strong that by midday the dollar was back to just below the level before the intervention. Investors quickly moved in to buy dollars on dips.

Repeated remarks by the government’s financial officials were also ignored.

``We are worried about the situation today,″ Finance Minister Hiroshi Mitsuzuka said. ``An excessively weak yen, as I have always said, is undesirable, and we will maintain our policy to deal with it appropriately at an appropriate time.″

But traders were skeptical. Tokai Bank trader Takayuki Togawa said investors were only finding reasons to sell the yen.

``Asian currencies are tumbling and there are serious concerns about Japan’s economy,″ Togawa said. ``Without the intervention, the yen’s fall could not be halted even briefly.″

Earlier, buying by Japanese institutional investors and hedge funds briefly pushed the U.S. currency to as high as 134.25 yen _ its highest level since hitting 134.95 yen on April 27, 1992.

Persistent weakness in Japanese stock prices prompted the initial bout of yen selling, Togawa said.

Share prices on the Tokyo Stock Exchange continued to fall Tuesday morning.

The benchmark 225-issue Nikkei Stock Average fell 127.17 points, or 0.86 percent, ending the morning session at 14,829.67. On Monday, the first day of trading this year, the average lost 301.90 points, or 1.98 percent.

The broader Tokyo Stock Price Index of all issues listed on the first section fell 10.27 points, or 0.88 percent, to 1,156.36. The TOPIX closed down 8.40 points, or 0.71 percent Monday.

Traders said the market will likely continue to fall in the near term unless the government comes up with further stimulus measures to boost the economy and stabilize Japan’s financial system.

During the first Cabinet meeting of the year Tuesday, Prime Minister Ryutaro Hashimoto vowed to stabilize the nation’s financial system.

The yield on the benchmark No. 182 10-year Japanese government bond fell to 1.590 percent from 1.610 percent Monday, driving it’s price up to 109.66 from 109.52.

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