Dollar Sharply Higher, Share Prices Plunge
TOKYO (AP) _ The U.S. dollar was sharply higher against the Japanese yen late Friday morning, while share prices on the Tokyo Stock Exchange plunged.
The Nikkei Stock Average of 225 selected issues, which shed 289.29 points Thursday, lost 189.30 more points, or 0.57 percent, falling to 32,767.01 during the morning trading session.
The dollar was changing hands at 143.90 yen at late morning. It started trading at 144.37 yen, up 1.47 yen from Thursday’s close of 142.90 yen, and moved mainly in the range of 143.70 to 144.45 yen. In New York overnight, the currency ended at 143.78 yen.
Month-end buying of dollars for transactions by importers helped push up the dollar while some people were selling yen in anticipation of a poor performance by the pro-business ruling Liberal Democratic Party in the Tokyo Metropolitan election Sunday, traders said.
Prime Minister Sousuke Uno was hit with allegations in a widening sex scandal. Some traders expect the yen may fall further if the scandal-plagued LDP does badly in Sunday’s election, indicating difficulties in the upper house elections scheduled for July.
Because of the dollar’s rise, ″Some people are nervous about Bank of Japan intervention,″ said Ikeda Ichiro, head of the international corporate desk at Chemical Bank.
Kimio Kobori, a trader with the Bank of Tokyo, said the dollar had gone up before the Tokyo market opened, as players in the Sydney market bought the currency.
″Selling and buying the dollar have been mixed since the opening here, and the dollar-yen rate was moving little although the market is in a nervous mood,″ he said.
″The European central banks concertedly raised their discount rates Thursday, but it didn’t make investors turn away from the dollar,″ Kobori said.
West Germany’s Bundesbank raised two of its key interest rates by half a percentage point. Similar actions followed in France, Switzerland, Belgium, the Netherlands, Denmark and Austria.
On the stock exchange, dealers said the Nikkei’s plunge was pushed by the dollar’s rise and concerns over a potential hike in Japan’s official discount rate.
Concerns over rising interest rates caused prices of steel and financial issues to plunge, said Stephen Hill, senior manager at Jardine Fleming securities.
In addition, ″You could argue that politics is keeping some people on the sidelines,″ Hill said.
An overnight loss in the Dow Jones industrial average of 30 major issues in New York also helped the index to fall, dealers said.