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Nikkei Plunges, Dollar Up

May 9, 1989

TOKYO (AP) _ The Tokyo Stock Exchange’s key index plunged Tuesday while the U.S. dollar ended higher against the Japanese yen despite reported dollar-selling intervention by the Bank of Japan.

The Nikkei Stock Average of 225 selected issues finished at 34,031.87, losing 103.37 points, or 0.30 percent. The index had gained 180.25 points for a 34,135.24-point record closing on Monday.

The dollar ended at 135.00 yen, up 0.48 yen from the previous day’s 134.52- yen finish. The currency opened at 134.95 yen and ranged between 134.90 yen and 135.05 yen.

Traders said the Bank of Japan intervened in the market at about the 134.90-yen level and sold about $200 million.

″Right now the dollar is not rising further. However, that’s not because of the central bank intervention, but because of dollar-selling by speculative investors near the 135-yen level,″ said Takamasa Yamasaki, a dealer with Daiwa Bank in Tokyo.

″The Bank of Japan intervention this morning was successful in smoothing trading, but it wouldn’t help lower the current level of the dollar,″ he added.

Although the central bank intervention would not reverse the dollar’s trend, participants were unlikely to continue buying the dollar to raise it beyond the 135-yen level, he said.

Meanwhile, Japanese Finance Minister Tatsuo Murayama told a news conference early Tuesday the current yen-dollar exchange rate level was not much to worry about.

″We should wait to see what happens,″ he said.

On the stock exchange, the market’s main index erased its marginal gain in early trading and plunged ″mainly due to the dollar’s hike against the yen,″ said an analyst with Nomura Securities in Tokyo, speaking anonymously.

The index started to fall as electric power issues plunged due to the yen’s weak performance, the analyst added.

Other dealers said profit-taking selling after gains on seven consecutive trading days also caused the Nikkei’s decline.

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