Dollar At Record Low Against Yen
TOKYO (AP) _ Despite repeated intervention by Japan’s central bank, the dollar plummeted to another record low in Tokyo today, dragging down prices on the Tokyo Stock Exchange, traders said.
After opening at a record low 132.78 yen, down from Friday’s close of 133.75 yen, the U.S. currency continued falling, despite frequent dollar purchases by the Bank of Japan, because of pessimism over prospects for implementation of a U.S. deficit reduction accord, dealers said.
At one point, the U.S. currency fell to 132.35 yen. It went no higher than 132.80 yen before closing at 132.45 yen, a 1.30-yen loss for the day.
Stock prices sank almost across the board in very light trading, with the 225-stock Nikkei average losing 365.45 points and closing at 22,686.78.
″It’s not a wave of selling, but rather the inexorable weight of all the fundamentals moving the dollar down,″ said Alan Yamashita, foreign exchange manager at Goldman Sachs. ″All the Bank of Japan can do is brake its fall.″
On Friday, the dollar fell below the 134-yen level in Tokyo for the first time in 17 days. The previous record low for the U.S. currency in Tokyo was 133.30 yen, set on Nov. 10, when the dollar closed at 133.65 yen.
″Firm bearish sentiments toward the dollar still remain in the market, because many market players feel that implementation of the U.S. deficit- cutting package will need much more time than expected,″ said an official of a major Japanese commercial bank, who spoke on condition of anonymity.
Another trader agreed, adding: ″Traders can find little bullish news for the dollar in the market.″
Dealers said many players on both markets stayed on the sidelines today, waiting for implementation of the agreement between U.S. congressional and White House negotiators to reduce the massive U.S. budget deficit by $76 billion over the next two years.
The pact must be ratified by both the House of Representatives and Senate, and doubts have surfaced on financial markets that it will be fully implemented.
The U.S. trade and budget shortfalls have been blamed for pulling down the value of the dollar.
On the stock market, dealers said sell orders far exceeded buy orders, with many export-oriented issues such as Sony, TDK and Matsushita Electric Industrial losing ground. Many domestic market-oriented stocks also moved lower.
″The market declined because of the low dollar,″ said Michio Katsumata of Nomura Securities. ″Participants are taking a wait-and-see stance until the effect of the low dollar on the Japanese economy is clear.″
A decline of the dollar against the yen makes Japanese products more expensive and less competitive overseas.