Monday June 15, 3:38 am Eastern Time
Japan Stock Prices Fall
TOKYO (AP) -- The dollar soared above 145 yen for the first time
in eight years Monday in Tokyo amid growing pessimism about the
Japanese economy. Japanese stock prices fell.
The dollar bought 145.62 yen at mid-afternoon, crossing the 145-yen level for the first time since August 1990. It was up 1.60
yen from late Friday in Tokyo and well above 144.72 yen Friday in New York.
The 225-issue Nikkei Stock Average fell 197.16 points, or 1.31 percent, to close at 14,825.17. On Friday, the Nikkei gained
8.29 points, or 0.06 percent.
Gross domestic product figures released Friday confirmed what many investors had feared: Japan's economy is in the midst of
its deepest recession in over 50 years.
The world's second-largest economy recorded its worst year in 1997 since the end of World War II, contracting 0.7 percent,
the Economic Planning Agency said.
That sent investors scurrying for cover, dumping yen for dollars. One concern is that Japan may be forced to cut interest rates
from already historic lows.
An interest rate cut would make overseas investments look more attractive because of their relatively higher rates of return.
While the Bank of Japan's policy board decided Friday to leave rates unchanged, traders pointed out the vote wasn't
unanimous, with some favoring a cut.
''If some members are actually in favor of credit easing, that would certainly accelerate investment in foreign bonds by
institutional investors,'' said Ryuichi Takami, a senior trader at Sanwa Bank Ltd.
There is also increasing doubt that Japan's central bank could stem the yen's fall even if it follows through on threats to intervene
in currency markets. Japan's economic fundamentals are simply too weak, and other countries have shown little enthusiasm for
propping up the yen.
''Even if there is intervention, it will be solo,'' said Seiji Masumoto, a dealer at Nippon Trust Bank Ltd.
On the Tokyo Stock Exchange, stocks fell amid worries the weakening yen may throw the rest of Asia into renewed economic
turmoil.
The Tokyo Stock Price Index of all issues listed on the first section ended down 10.04 points or 0.85 percent, at 1,167.21.
The TOPIX closed down 1.56 points, or 0.13 percent, on Friday.
A weak yen helps Japan's exporters at the expense of the rest of Asia. As the yen falls, Japanese products become cheaper in
key markets like the United States, snatching market share from Asian competitors.
That deprives hard-pressed economies like Thailand of desperately needed export revenues and foreign currency.
Meanwhile, the yield on the benchmark No. 182 10-year Japanese government bond dropped to 1.185 percent from Friday's
close of 1.210 percent. Its price rose to 112.12 yen from 111.94 yen.
|
