BY>> Dollar hits seven-year high against yen, gold down
TOKYO - The dollar hit a seven-year high against the yen Tuesday as
Japanese investors bought the U.S. currency to escape the miserable returns in
their own moribund financial markets. Tokyo stocks ended higher.
The dollar bought 137.46 yen in mid-afternoon trading, up 0.32 yen from late
Monday in Tokyo. During the day, the dollar peaked at 137.50 yen - its highest
level since August 1991.
U.S. financial markets were closed Monday for the Memorial Day holiday.
With Tokyo's stock market mired in a nine-year rut and the yield on bonds hitting
all-time lows, Japan's mutual fund managers have been dumping yen for dollars to
raise their holdings in high-flying U.S. markets.
Purchases of U.S. assets by Japanese investors, who already own 117.8 trillion
yen (dlrs 873 billion) worth of overseas stocks and bonds, have picked up
recently even in the face of warnings of an imminent correction on Wall Street,
traders said.
"There is a lot of buying demand from (Japanese) trust funds,'' said Takeshi
Chujo, a currency dealer at the Tokyo branch of Banque Paribas.
Part of the reason for the shift is growing pressure on fund managers here to
improve returns. Financial deregulation has opened the doors to savvy foreign
fund companies, which in April managed more of Japan's savings than
Japanese-run funds for the first time ever, the Nihon Keizai business daily
reported Monday.
Foreign investors have also fled Japan amid disappointment with Tokyo's efforts
to revive its economy. While the yen rallied briefly last month when Japan
announced a 16.7 trillion yen (dlrs 121 billion) stimulus package that included
temporary tax cuts, the optimism quickly faded as the government failed to make
those cuts permanent.
Nor do the world's central bankers appear too worried about the yen's slide. The
latest issue of U.S. News and World Report magazine touched off a wave of
dollar buying Monday when it quoted U.S. Treasury Secretary Robert Rubin as
saying he is willing to let the yen weaken further, even as far as 150 to the dollar. |
