Forex: Dollar Lower Vs Yen On Last Trading Day In 1999
Thursday, December 30, 1999
TOKYO (Dow Jones)--The dollar fell slightly against the yen in Asia Thursday on the last trading day for the Tokyo foreign exchange market in 1999.
The market was very thin as most players stayed sidelined in order to avoid possible Y2K computer problems.
Against the euro, the dollar also declined slightly from its late Wednesday levels in New York in lackluster trading.
Trading activity lessened further Thursday as almost all players decided to focus their attention on last-minute preparations for coping with potential Y2K computer software glitches.
"Spot trades done today in dollar-yen will settle Jan. 5, while those in euro-dollar will settle Jan. 3, so no one really wants to trade these currency pairs due to Y2K concerns," said Shuji Takano, assistant foreign exchange manager at ABN AMRO Bank in Tokyo.
The Japanese financial markets will be closed Friday through Monday for the New Year's holiday.
While the dollar edged slightly higher in the morning on dollar demand from some Japanese investors ahead of the Tokyo fixing at 0100 GMT, the dollar soon lost its gains on customer-related selling by a few Japanese banks and fell to near the 102-yen level where it stayed for the rest of the session.
"There was some dollar-yen selling by a few banks on behalf of Japanese investment trust funds that were seeking to unwind foreign-currency denominated assets today," said a dealer at a Japanese trust bank.
However, the relative lack of trading activity confined the dollar to a tight range of 102.02-102.27 yen.
A decision by Japan's ruling coalition Wednesday to extend for another year a system that provides blanket guarantees for bank deposits failed to elicit any reaction from market participants. The coalition agreed to limit government guarantees on bank deposit to up to 10 million yen per deposit in April 2002. Originally, the government was expected to introduce that system in April of 2001.
"While some overseas players might initially sell yen for dollars on the view that Japan is slowing down its reform of the banking sector, the yen's slide should be limited as the credit ratings of Japanese banks have not been affected," Takano said.
Although the yen strengthening trend is still intact, fears of intervention by the Bank of Japan should help to support the dollar, dealers said.
"Market players are reluctant to test the resolve of the Bank of Japan at this time," the Japanese trust bank dealer said.
Although the dollar dropped as low as 101.84 yen in New York late Wednesday and the BOJ didn't intervene, memories of the central bank's most recent dollar-buying intervention last Friday are still fresh in players' minds, dealers said.
At 0515 GMT (12:15 a.m. EST), the dollar was quoted at 102.10 yen, below 102.18 yen late Wednesday in New York. The dollar was at 102.34 yen late Wednesday in Tokyo.
The euro was at $1.0071, higher than $1.0045 late Wednesday in New York. The euro was at $1.0083 in Tokyo Wednesday.
Against the yen, the euro was quoted at 102.82 yen, up from 102.64 yen in New York late Wednesday. The euro was at 103.19 yen in Tokyo late Wednesday.
Sterling was at $1.6190, up from $1.6172 in New York late Wednesday. Sterling was at $1.6155 in Tokyo late Wednesday.
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