Dollar Plunges, Stocks Gain
TOKYO (AP) _ The dollar dived against the Japanese yen today after a government official’s remark led to expectations of international agreement to let the dollar decline. Share prices rose in active trading.
The dollar closed at 131.15 yen, down 1.96 yen from Wednesday’s 133.11-yen close and also below its overnight finish of 132.60 yen in New York. It was the dollar’s lowest close in Tokyo since 130.95 yen on Feb. 22.
The currency opened at 132.70 yen and ranged between 130.75 yen and 132.72 yen.
Spot trading totaled $16.53 billion, a huge jump from Wednesday’s $3.66 billion.
Dealers said the yen surged against the dollar after lunchtime news reports that a Finance Ministry official had said Japanese companies still be would competitive if the dollar fell below 130 yen.
″Market players interpreted the remark to indicate that Japan and the United States might have been in agreement to allow the dollar’s decline,″ said a Bank of Tokyo dealer, speaking on condition of anonymity.
He said the remark also prompted expectations that a forthcoming financial meeting among the Group of Seven major industrial nations might agree to a weaker dollar.
″Massive selling of the dollar easily swallowed importers’ dollar buying,″ he said. ″Also, there is little chance for the dollar’s recovery for a while because of continuing pessimism over the U.S. economy.″
On the stock market, the 225-issue Nikkei Stock Average gained 336.33 points, or 1.38 percent, closing at 24,711.44. On Wednesday, the average slipped 1.90 points, or 0.01 percent.
The Tokyo Stock Price Index of all first section issues finished at 1,882.74 points, up 20.70 points, or 1.11 percent. The TOPIX rose 10.97 points, or 0.59 percent, on Wednesday.
Volume on the first section was estimated at 600 million shares, up from Wednesday’s 471 million. Advancing issues outnumbered declines 690 to 327, with 135 issues unchanged.
Traders said stock prices surged in the afternoon on the yen’s sharp advance against the dollar.
The yen’s strength led to widespread expectations of lower domestic interest rates, they said. Lower interest rates usually encourage stock investment.
Meanwhile, Finance Minister Ryutaro Hashimoto announced today that he would resign later this month to take responsibility for a series of scandals rocking the financial industry.
The announcement had little impact on the markets, said Katsumi Sakamoto, a trader with Wako Securities, Co.
The benchmark No. 129 10-year Japanese government bonds closed at 103.18 points, up from Wednesday’s 102.90-point finish. Their yield fell to 5.835 percent from 5.885 percent.