U.S. Dollar Continues Its Free Fall Yen, Mark Jump Despite Action By Bank Of Japan
The flagging American dollar continued its free fall against the Japanese yen and the German mark Monday in morning trading in Tokyo, brushing aside continuous intervention by the Bank of Japan.
Tokyo stocks rose slightly.
The dollar traded at 93.25 yen at noon, down 2.03 yen from late Friday and also far below its level of 94.04 yen in late New York trading Friday.
The dollar also was trading at 1.4030 German marks, below 1.4245 marks late Friday in New York and 1.4425 marks in Tokyo late Friday.
At one point in early trading, the dollar slid to 92.90 yen, its lowest level against the yen anywhere in the world since the modern exchange rate system was established in the late 1940s.
Traders said Japan’s central bank was intervening, buying large amounts of the American currency in a largely ineffective attempt to stem the dollar’s fall.
“The dollar is facing a freefall,” said Cho Narushisa, a dealer with Citibank in Tokyo.
He said the Bank of Japan was continuously stepping into the market but that no other central banks were seen on the market in early trading.
Washington has long favored a stronger yen to make American goods cheaper and more attractive to Japanese consumers in an attempt to cut the trade deficit with Japan, which is about $60 billion a year. But costlier Japanese goods can push up inflation in the United States.
Economists also worry that a falling dollar, hurt by Mexico’s currency crisis and a persistent trade deficit with Japan, could disrupt trade and cut foreign investment in the United States.
Later in the morning, the yen’s rise halted as speculators moved to the sidelines, said Akira Narumi, a dealer at Sakura Bank.
Japanese Finance Minister Masayoshi Takemura, repeating comments made over the weekend, said Monday that Japan will cooperate with the United States and major European nations to support the dollar.
The 225-issue Nikkei Stock Average rose 26.51 points, or 0.16 percent, to end morning trading at 17,066.13 points. On Friday, the average gained 76.44 points, or 0.45 percent, closing at 17,039.62.
The Tokyo Stock Price Index of all issues listed on the first section was up 0.70 points, or 0.05 percent. The TOPIX closed on Friday up 8.16 points, or 0.60 percent.
Investors said stocks held steady despite the high yen on a waitand-see attitude.