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Stocks Slip, Dollar Dips

March 22, 1989

TOKYO (AP) _ Share prices plunged on the Tokyo Stock Exchange on Wednesday, while the U.S. dollar also slipped against the Japanese yen.

The Nikkei Stock Average of 225 selected issues, which on Monday shed 366.21 points in its largest one-day drop this year, lost another 211.56 points, or 0.67 percent, to finish trading at 31,443.24. The index gained a moderate 129.07 points shortly after the start of morning trading but began to decline by midmorning.

The dollar closed at 131.40, down 0.52 yen from its 131.92-yen close on Monday, the last trading day before Tuesday’s national holiday. The currency started at 131.18 yen and moved in a range between 131.11 yen and 131.43 yen.

The U.S. currency started off lower in Tokyo to adjust to levels in New York overnight, where it finished at 131.28 yen, said a dealer with the Bank of Tokyo.

A 0.4 percent rise in the U.S. consumer price index for February released Tuesday discouraged dollar-buying interest by U.S. investors, the dealer said anonymously, adding that the lower-than-expected inflation rate lessened expectations for interest rate hikes. In January the index grew by 0.6 percent.

The dollar-yen rate remained steady in Tokyo because investors were adjusting their dollar positions, said another dealer with a commercial bank in Tokyo, also speaking on condition of anonymity.

Concern over higher U.S. interest rates on a long-term basis and maintaining steady oil prices has made investors reluctant to sell dollars, he said.

Bank of Japan Governor Satoshi Sumita said Wednesday the dollar and crude oil prices were unlikely to keep rising and indicated the central bank would closely monitor their movements, according to the Economic Planning Agency.

Meanwhile, stock prices fell as investors stepped off to the sidelines in the absence of any incentives to buy, said Kenji Ishizuka, a trader with Daiwa Securities in Tokyo.

″A variety of issues were traded, but dealers were reluctant to make major moves mainly due to the approach of year-end account settlements,″ he added. The Japanese business year ends March 31.

The moderate rise in the U.S. consumer price index eased Japanese investors’ concerns for inflation in the United States but there was still some anxiety over the future of oil prices and higher interest rates, traders said.

Stock and currency exchange markets in Japan were closed Tuesday for the Spring Equinox national holiday.

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