Dollar Falls, Stocks Up
TOKYO (AP) _ The Tokyo Stock Exchange’s key index rose today, and the U.S. dollar fell against the Japanese yen, despite a major election defeat for the pro-business governing party and the prime minister’s announced plan to resign.
The Nikkei Stock Average of 225 issues, which gained 234.56 points on Friday, added 193.90 points, or 0.69 percent, closing at 34,093.33.
The dollar opened at 143.25 yen, up 1.10 yen from Friday’s 142.15 yen close, but fell steadily and ended the day at 141.95 yen. It ranged between 141.80 yen and 143.45 yen.
Traders said the dollar was bought initially over political uncertainties following a major defeat for the Liberal Democratic Party in Sunday’s election.
In voting for half the seats of Japan’s upper house of Parliament, the Liberal Democrats lost their majority for the first time in 34 years.
Monday morning, Prime Minister Sousuke Uno announced that he would resign to take responsibility for the defeat.
″But regardless of all that, the yen wasn’t sold to any great extent,″ said Toshiaki Kakimoto, an analyst at Sumitomo Bank.
″The market had already evaluated the situation and predicted that the Liberal Democrats would lose ever since they were defeated in the Tokyo metropolitan elections (in early July),″ Kakimoto said.
In addition, he said, ″the trend toward declining interest rates in the United States has become clear.″
Federal Reserve Chairman Alan Greenspan ″has switched from emphasizing inflation avoidance to recession avoidance,″ Kakimoto said.
This policy change will stimulate dollar selling, he added.
Lower U.S. interest rates tend to make the dollar less attractive to foreign investors.
On the stock market, Kenji Ishizuka, a trader with Daiwa Securities, said the market’s pre-evaluation of the political situation permitted today’s rally.
″There was no other bad market-affecting news,″ he said.
A total of 550 million shares changed hands during the day.