Stocks Fall, Dollar Up
TOKYO (AP) _ The Tokyo Stock Exchange’s key index fell today after advancing in eight consecutive trading days, while the dollar edged higher against the Japanese yen.
The dollar closed at 144.67 yen, up 0.69 yen from Friday’s 143.98-yen finish. The currency opened at 144.58 yen and moved narrowly between 144.50 yen and 144.75 yen.
Japanese investors, among them trading houses and investment trusts, bought the dollar on rumours the U.S. defense budget will be cut, said Toru Nomura, a foreign exchange analyst with New Japan Securities, Co.
When the dollar hit its high of 144.75 yen in morning trading, market players stopped buying on concern over dollar-selling intervention by the Bank of Japan, he said.
The Bank of Japan sold an estimated $200 million when the dollar topped 144.60 during the morning session, he said. Japan’s central bank does not comment on its monetary activities.
Meanwhile, Bank of Japan Gov. Satoshi Sumita said today it is necessary for the central bank ″to maintain close coordination with other countries to keep currencies stable,″ and ″to take appropriate measures.″
Denying speculation that the central bank may raise the discount rate again soon, Sumita said the central bank is studying the effectiveness of previous base rate increases.
The bank has raised its official key rate twice this year, to the current 3.75 percent, to prevent the yen from sliding further and to ward off inflation.
″His comments on the discount rate discouraged Japanese investors’ yen- buying incentives and the strengthened dollar rose back afterwards,″ Kanai said, predicting little movement in currency markets ahead of Thursday’s Labor Thanksgiving holiday in Japan, when Japan’s financial markets will be closed.
On the stock exchange, the market’s key index reversed its uptrend after its earlier gains, as market players started to sell issues for profit-taking, dealers said.
The 225-issue Nikkei Stock Average lost 70.16 points, or 0.20 percent, ending at 35,893.58. It gained 87.40 points for a record closing of 35,963.74 on Friday.
Nomura Securities analyst Yoshiro Inoue said the yen’s weakness against the dollar dampened buying incentives.
Trading houses, however, posted gains due to expectations of expanding business opportunities with the Soviet Union following a recent visit by Alexander Yakovlev, a top advisor to Soviet leader Mikhail S. Gorbachev.
An estimated 700 million shares changed hands on the first section in sluggish trading, down from last Friday’s 900 million.