Yen = a penny
It happened early this morning.
>>The dollar has been declining on growing speculation that the Federal Reserve will cut interest rates further to shore up the sagging American economy and calm jittery financial markets.
"The momentum is definitely downward for the dollar," said Daisaku Ueno, senior economist at Nomura Securities Co. "With the momentum going like this, no one knows where it will stop."
The U.S. currency's slide likely won't stop until worries subside about the U.S. credit crunch, set off by a spike in defaults on risky mortgages, said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.
A strong yen makes the nation's exports more expensive abroad and erodes profits from overseas.
"That's not good for Japan's economic growth," said Yamamoto.
Anxious investors sent Japan's stock market to its lowest in 2 1/2 years, with the Nikkei 225 index tumbling 3.3 percent to 12,433.44.
So far this year, the dollar has fallen 10 percent against the yen. It was trading at 102.04 yen late Wednesday in New York.
The dollar has fallen so quickly in recent days that Japan's finance minister warned the markets against causing "excessive" moves in the dollar-yen rate -- language that indicates an increasing concern about the rising yen damaging Japan's slowing economy.
"It's also a shared perception among the (Group of Seven leading industrialized nations) that excessive exchange rate moves are undesirable," Finance Minister Fukushiro Nukaga told reporters.
But his comments are largely being interpreted in the markets as an indication that Japan is not going to intervene in the markets to prop up the dollar.
Tokyo is also seen as unlikely to shift its reserves away from the U.S. Treasuries and dollar deposits that make up most of its reserves now.
Japanese company officials have expressed worries about the dollar's recent weakness.
Just hours before the dollar's decline below 100 yen, Toyota Motor Corp. President Katsuaki Watanabe acknowledged some worries about excessive currency fluctuations.
While declining to comment on the dollar's drop, he told reporters that Toyota may have to come up with new steps, not just cost cuts, as a possible response. He did not elaborate.
"We may have to think whether there are other things to do," he said.<< |
