Stock Index Up, Dollar Down
TOKYO (AP) _ The Tokyo Stock Exchange’s key index rose sharply today, but the dollar fell against the yen after Prime Minister Noboru Takeshita announced he will resign as soon as Parliament approves the fiscal 1989 budget.
The dollar closed at 131.17 yen, down 0.21 yen from Monday’s 131.38-yen finish. It opened at 131.65 yen, its high for the day, and ranged as low as 131.05 yen.
″The dollar started higher following its weak note on overseas markets, where the yen was sold, but Japanese investors concertedly bought the (yen) following news about Mr. Takeshita’s resignation,″ said an analyst with a commercial bank in Tokyo, speaking on condition of anonymity.
Investors believed that Takeshita’s departure would eliminate some political and economic tensions, he said.
Takeshita has been linked with a company at the center of a stock- profiteerin g and bribery scandal, and opposition parties have been boycotting budget deliberations in Parliament to demand that the government clear up the situation.
″There has been speculation of some more arrests of politicians, but the majority expects that things would not worsen,″ the analyst added.
Also encouraging yen-buying today were expectations that the Japanese central bank might raise its interest rate soon.
Higher domestic interest rates, which would narrow the interest rate gap between the United States and Japan, would weaken dollar-buying incentives, traders said.
Bank of Japan Gov. Satoshi Sumita told a meeting of branch chiefs today that the bank would take appropriate measures if prices become unstable.
On the stock market, the Nikkei Stock Average of 225 selected issues, which fell 223.89 points Monday, shot up 438.86 points, or 1.34 percent, closing at 33,244.78. The gain was the third-largest of the year.
News reports early today that Takeshita might resign boosted buying, said Kenji Ishizuka of Daiwa Securities.
″Since Mr. Takeshita would not resign until the budget is approved, participants concertedly bought construction issues because the budget approval guarantees public construction,″ he added.
Takeshita announced his decision to resign following a Cabinet meeting. His popularity has been eroding steadily in the face of the stock-profiteering and bribery scandal and a new sales tax.
Besides construction issues, steel shares attracted investors. Although share prices were higher across the board, trading was only moderate, with first section volume estimated at 800 million shares, up from Monday’s 450 million.
Ishizuka said some investors were concerned over domestic consumer price figures for March, due to be announced later this week.