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Dollar Falls Sharply Against Yen

February 3, 1988

TOKYO (AP) _ The dollar declined sharply against the yen in Tokyo trading today, while stock prices fell moderately.

The dollar closed at 127.88 yen, down 1.02 from Tuesday’s close of 128.90 yen. It lost 0.10 yen Tuesday after gaining 1.82 yen on Monday. The dollar opened today at 127.88 yen and ranged between 127.65 yen and 128.03 yen.

″The dollar’s decline followed the overnight fall at New York,″ said Hiroki Abe of the Bank of Tokyo. He said the 0.25 percentage point cut in U.S. prime lending rates spurred the dollar-selling.

Major U.S. banks announced Tuesday a cut in their prime lending rates to 8.5 percent from 8.75 percent. Lower interest rates tend to make the dollar less attractive to foreign investors.

On the Tokyo Stock Exchange, the Nikkei Stock Average of 225 selected shares, which lost 60.11 points Tuesday, shed another 80.66 points, or 0.32 percent, closing at 23,591.55.

″Investors retreated to the sidelines prior to the completion of this week’s U.S. Treasury refunding,″ said Hiromi Yoneyama of Wako Securities.

The $27 billion quarterly refunding operation began Tuesday with the sale of $9.25 billion of three-year notes, followed by sales of 10-year and 30-year notes today and Thursday.

The refunding drove investors to the sidelines due to uncertainty over the dollar and interest rates, Yoneyama said.

He said the declining dollar also made investors take a cautious attitude, adding that the trend would continue until the announcement of U.S. commodity trade figures for December on Feb. 12.

The trading was moderate, with first section trading volume at 470 million shares. Electricals were all lower along with precision instruments. Machineries and textiles were higher.

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