Dollar Falls to Record Low, Stocks Edge Down
Aug. 02, 1993
TOKYO (AP) _ The dollar plunged to a record low against the Japanese yen today as traders continued to put their money in yen for safety amid the European currency turmoil. Tokyo share prices slipped in light trading.
The dollar closed at 104.61 yen, down 0.99 yen from Friday's close and its lowest finish in Tokyo since modern exchange rates were established in the late 1940s. The previous lowest close was 105.03 yen on June 15.
The dollar had finished at 104.70 in New York on Friday.
It now has lost a total of 20.37 yen, or 16.3 percent, since Feb. 2.
The dollar's fall came despite reported yen-selling by Japan's central bank in efforts to halt the Japanese currency's rise. The bank does not comment on its exchange market activities.
Japanese officials, however, have said overly rapid gains by the yen could dampen the nation's recovery from its economic slump.
The dollar opened at 105.00 yen and ranged between 104.45 yen and 105.30 yen.
''The uncertainty has yet to be cleared about the European money system,'' said Masatoshi Ishida, a dealer with Sakura Bank. The U.S. and Japanese currencies are considered safe havens in times of instability and, because of its recent strength against the dollar, European speculators appeared more interested in the yen.
Faced with renewed assaults on their currencies, finance ministers from the 12-nation European Community met in Brussels over the weekend through early Monday and eased some rules in their 14-year-old monetary system.
The officials agreed to widen by 15 percent the bands within which their currencies can fluctuate in the EMS.
Yoichiro Ishihara, a currency analyst with Long-Term Credit Bank of Japan, said the EC decision would benefit the yen as European investors were shifting funds into yen from European currencies.
Ishihara and other analysts said the decision would allow room for France to lower interest rates on a long-term basis.
''What they did today was to take some of the pressure off the system, but that pressure will return again later, possibly in the next two weeks,'' said Gilbert Suzuki, an analyst with Citibank.
Meanwhile, the 225-issue Nikkei Stock Average fell 36.61 points, or 0.18 percent, closing at 20,343.53. On Friday, it had lost 76.71 points, or 0.37 percent, to 20,380.14.
The Tokyo Stock Price Index of all issues listed on the first section was down 5.12 points, or 0.31 percent, to 1,654.79. It had fallen 0.14 points, or 0.01 percent, to 1,659.91 on Friday.
Major export-oriented blue chips were sold following the yen's surge.
A higher yen tends to make Japanese exports more expensive abroad and in theory, less competitive, while making imports cheaper in Japan.
Some U.S. officials have said they favored a stronger yen to help efforts to pare Japan's huge trade surplus with the United States, which amounted to nearly $50 billion last year.
An estimated 210 million shares changed hands on the first section, down from Friday's 355 million. Declines outnumbered advances 616 to 336, with 196 issues unchanged.
The price of the benchmark No. 145 10-year Japanese government bonds closed at 108.51 yen, up 0.03 yen from Friday's finish. Their yield fell by 0.005 percentage point to 4.155 percent.