Dollar Tumbles to Record Low, Stocks Fall
TOKYO (AP) _ The dollar tumbled to a new low against the yen today as Japan’s government sought ways to halt the slide and head off harm to Japanese business. Tokyo share prices fell in thin trading.
The dollar was changing hands at 92.68 yen by late afternoon, down from 93.40 yen in Tokyo late Monday and 92.80 yen in late New York trading overnight.
Japan’s central bank bought dollars when the currency fell to about 92.60 yen in an effort to boost the U.S. currency, traders said.
The day’s low also was the dollar’s lowest level in Tokyo since the modern exchange rate system was established in the late 1940s. The previous low of 92.70 yen had been set Monday.
Hedenobu Yanagisawa, senior manager of Fuji Bank’s foreign exchange department, said sentiment toward the dollar would remain bearish unless both the trade and fiscal deficits of the United States can be resolved.
``It is hard to find anyone to buy dollars,″ Yanagisawa said.
Japanese government ministers spent the earlier part of today trying to find the words to sway the market toward a lower yen without conveying a sense of crisis.
Masahiro Komura, director-general of the Economic Planning Agency, suggested at a regular news conference that lowering the nation’s interest rates might be one option.
Lower interest rates tend to make a nation’s currency less attractive to investors.
Japan’s official discount rate, the Bank of Japan’s charge for its loans to commercial banks, now stands at 1.75 percent, the lowest among major industrialized nations.
In a separate news conference, Minister of International Trade and Industry Ryutaro Hashimoto said he was worried about what the high yen would do to Japanese small businesses.
``It might be going too far to call this a crisis, but I’m taking these numbers very seriously,″ Hashimoto said.
A higher yen makes Japanese exports more expensive abroad and thus less competitive, cutting into earnings of the nation’s export-dependent companies. But imports in Japan theoretically tend to be cheaper, helping consumers.
Hashimoto said Japan’s auto industry will lose 31 billion yen for every one-yen drop in the dollar, while the electronics industry will suffer a loss of 23 billion yen.
So far this year, the dollar has fallen nearly 7 percent.
Finance Minister Masayoshi Takemura said earlier in the day that there remains a strong, common perception among the world’s leading economies that currency markets should not be allowed to fluctuate based on speculation.
Meanwhile, the Nikkei Stock Average of 225 selected issues fell 85.44 points, or 0.50 percent, closing at 16,955.28. The Nikkei gained 1.10 points to 17,040.72 on Monday.
The Tokyo Stock Price Index of all shares listed on the Tokyo Stock Exchange’s first section was down 8.37 points, or 0.61 percent, to 1,353.28. On Monday, it had closed at 1,361.65, down 0.69 points.
Share prices fell moderately in thin trading as many investors retreated to the sidelines to watch currency movements, dealers said.
An estimated 200 million shares changed hands on the first section, down from Monday’s 211 million. Declines outnumbered advances 680 to 272, with 206 issues unchanged.
The price of the benchmark No. 174 10-year Japanese government bonds finished at 103.59 yen, up 0.91 yen from Monday’s close. Their yield fell to 4.075 from 4.205.