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Dollar Closes At New Record Low, Stocks Litttle Changed

May 28, 1993

TOKYO (AP) _ Despite dollar-buying efforts by the Bank of Japan, the dollar finished at another record low today against the Japanese yen. Prices on the Tokyo Stock Exchange were little changed.

The dollar closed at 107.38 yen, down 0.67 yen from Thursday’s close, its lowest in Tokyo since modern currency exchange rates were established in the late 1940s.

It opened at 107.18 yen, and ranged between 107.10 yen and 107.60 yen after closing overnight in New York at 107.30 yen.

Currency dealers said the dollar temporarily rose to the day’s high on active dollar buying by the Bank of Japan around midday, but fell back toward the close.

″The dollar’s downtrend couldn’t be stopped by the intervention,″ said Akira Narumi, assistant general manager at Sakura Bank’s foreign exchange division.

Narumi said that part of the Bank of Japan’s dollar-buying was on behalf of the U.S. Federal Reserve for the trading during Tokyo time.

He said however, the market saw the Fed’s cooperation as an action to stop the dollar’s decline against the European currencies.

″Players’ understanding is that if it’s only the yen strengthening against the dollar, the Fed would not cooperate, because we all know that the United States is happier with the higher yen to combat the trade deficit,″ he said.

Dealers said the dollar recovered weakly on massive dollar buying by the Bank of Japan and rumors of similar intervention in the Singapore foreign exchange market, but failed to break through resistance at 107.75 yen.

The dollar began its latest plunge Tuesday, reacting to a report by the U.S. Treasury Department to Congress that was interpreted as another endorsement of a higher yen as a way to fight the U.S. trade deficit. A stronger yen makes Japanese products more expensive and less competitive overseas.

On the stock market, the 225-issue Nikkei Stock Average slipped 8.94 points, or 0.04 percent, ending the week at 20,843.69. On Thursday, the key index lost 43.36 points, or 0.21 percent, to 20,852.63.

The Tokyo Stock Price Index of all issues listed on the first section was up 1.11 points, or 0.07 percent, to 1,654.82. TOPIX gained 13.99 points, or 0.85 percent, to 1,653.71, the day before.

Trading was moderate with an estimated 550 million shares, down from Thursday’s 750 million, changed hands on the first section. Gainers outnumbered losers by 176 to 107, with 77 issues unchanged.

Traders said the Nikkei slipped on index-linked arbitrage sellings as some players took profits from price gaps between spot and futures issues.

Paul Migliorato, senior salesman at Jardine Fleming Securities, said trading was slow, as investors left market support up to institutional investors in typical pre-weekend doldrums.

The price of benchmark No. 145 10-year Japanese government bonds closed at 105.62 yen, down 0.17 yen from Thursday’s close. Their yield rose by 0.025 percentage points to 4.600 percent.

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