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Tokyo Stocks Fall in Early Trading

May 17, 1999

TOKYO (AP) _ The dollar rose against the yen early Monday following the release of data showing Japan’s current account surplus dropped 25.5 percent in March. Japanese stocks fell sharply.

The dollar bought 123.20 yen in early trading, up 1.02 yen from late Friday in Tokyo and also above its late New York level of 122.73 yen on Friday.

The benchmark 225-issue Nikkei Stock Average shed 268.73 points, or 1.60 percent, to 16,541.66 in the first 30 minutes of trading. On Friday, the average closed down 40.86 points, or 0.24 percent.

In currency dealings, the dollar’s rise above 123.00 yen came after Japan’s Finance Ministry reported that the nation’s current account surplus fell 25.5 percent to 1.073 trillion yen (dlrs 8.76 billion) from the same month last year.

Also Monday, the ministry announced that Japan’s current account surplus climbed 17.6 percent to a non-seasonally adjusted 15.227 trillion yen (dlrs 124 billion) for fiscal year 1998.

The dollar last traded above 123.00 yen on March 8.

Dealers said the dollar could test its upside Monday, buoyed by the widening gap between U.S. and Japanese bond yields.

Bank of Japan Governor Masaharu Hayami said Friday that the central bank will maintain its easier monetary policy until deflation worries are dispelled.

Japan’s official discount rate, the interest rate charged by the Bank of Japan on loans to commercial banks, now stands at a record low of 0.5 percent.

The greenback’s strength also followed remarks by U.S. Treasury Secretary-designate Lawrence Summers, who reiterated that a strong dollar is in his country’s national interest.

Summers made his remarks Sunday following a weekend gathering of Asia-Pacific finance ministers at Langkawi, a resort island off northern Malaysia.

Summers said that a strong dollar benefits the United States by augmenting lower inflation and trade income.

In other currencies, the euro was traded at 131.65 yen, up from 130.33 yen late Friday in Tokyo.

On the stock market, share prices started sharply lower after fears of higher U.S. interest rates led to a big drop Friday on Wall Street.

On Friday, the Dow fell 193.87 points to 10,913.32, erasing a 106.82-point gain Thursday, after a 0.7 percent rise in consumer prices in April stirred fears of inflation.

The broader Tokyo Stock Price Index of all issues listed on the first section was down 18.60 points, or 1.38 percent, to 1,328.85. The TOPIX closed down 4.52 points, or 0.33 percent, on Friday.

The yield on the benchmark No. 212 10-year Japanese government bond rose to 1.240 percent in early trading from Friday’s close of 1.230 percent. Its price fell to 102.33 yen from 102.42 yen Friday.

(km-dj)

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