Dollar Falls to 3-Week Low vs Yen; Japan Again Warns It Might Sell Dollars
London, Aug. 20 (Bloomberg) -- The dollar fell to a three- week low against the yen after a top Japanese official said the yen has not strengthened enough against the U.S. currency in recent days, which may prompt the government to sell dollars. ''If intervention does happen, we should see a turnaround of about 3 to 5 yen,'' said Giorgio Radaelli, head of European market research at First Chicago. Still, he sees the yen declining to 155 per dollar in six months as ''intervention is only a short-term boost, and the economy is dismal.''
Haruhiko Kuroda, director-general of the Finance Ministry's international bureau, said the yen, which has risen more than 2 percent this week, is still too weak and ''should be further corrected.'' He said Japan will sell dollars ''at the appropriate time as necessary.''
The dollar fell as low as 142.58, its lowest since July 30, when it touched 141.63 yen and down from 144.18 late yesterday. The dollar also fell against the deutsche mark, to 1.7934 from 1.7976.
Today's comments from Kuroda add to growing speculation Japan is poised to buy yen. Eisuke Sakakibara, Japan's vice finance minister for international affairs, said yesterday ''the time for Japan to intervene to push up the yen is near.''
He said he will contact U.S. Deputy Treasury Secretary Lawrence Summers during his stay in the U.S. in the coming days. That boosted expectations that Japan may ask the U.S. to also buy yen, though Sakakibara didn't say what he would discuss with Summers.
Japan and the U.S. bought yen for dollars on June 17, the day after the yen reached a then eight-year low of 146.78 to the dollar. The action helped shave 13 yen off the dollar's value, though the U.S. currency regained those losses to touch a new eight-year high of 147.66 yen on Aug. 11.
Little Relief
The yen may resume its fall against the dollar amid signs that Japan won't quickly restructure its ailing banking system and emerge from the worst recession in half a century, traders said.
The Japanese government may spend as much as 1 trillion yen to pave the way for a merger between financially troubled Long- Term Credit Bank of Japan Ltd. and Sumitomo Trust & Banking Co., the Nihon Keizai newspaper said without citing sources. Prime Minister Keizo Obuchi denied the government is considering a capital injection into LTCB. ''Even if the battered LTCB will be helped by the government, there remain concerns that other banks may fail, so the yen is just on the way to fall,'' said Tetsuhisa Hayashi, a foreign exchange manager at Bank of Tokyo-Mitsubishi Ltd.
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