Dollar Hits 5-Year Low Against Yen; Gold Off
The dollar fell against most major hard currencies today, hitting its lowest point in almost five years against the Japanese yen. Gold also slid.
The dollar dropped below the 2.60 level against the West German mark for the first time since April 2, 1984.
It plunged by 3.40 yen to 202.55 yen on the Tokyo Foreign Exchange Market, where trading ends before Europe’s business day begins. Later, in London, it was quoted at 203.43 yen.
Dropped Almost 40 Yen
It was the dollar’s lowest yen level since hitting 202.20 in January, 1981.
The dollar has fallen almost 40 yen since the finance ministers of the five leading Western industrial powers decided in September to depress the U.S. currency to boost American trade competitiveness and defuse calls by U.S. businessmen and politicians for protectionist measures.
Today’s plunge followed statements by Satoshi Sumita, governor of the Bank of Japan, that the U.S. currency still was not low enough.
Although Sumita said no target level was set, the Japanese financial newspaper, Nihon Keizai Shimbun, said that Japan intended to push the dollar below the 200-yen mark.
Gary Dorsch, senior money market analyst at G. H. Miller and Co., a Chicago-based commodities firm, said: “Traders took that as a cue to sell dollars with a reckless abandon and knock the currency down. The market has been prepositioned for it and his comments just accelerated the decline.”
Dealers in Frankfurt, West Germany, said Sumita’s remarks to a news conference were the main reason for the dollar’s slide there against the mark.
Other dollar rates at mid-morning, compared to late Wednesday, were: 2.5930 West German marks, down from 2.6030; 2.1335 Swiss francs, down from 2.1425; 7.9045 French francs, down from 7.9275; 2.9225 Dutch guilders, down from 2.9345; 1,751.50 Italian lire, down from 1,757.50, and 1.3723 Canadian dollars, down from 1.3775
The British pound was the only currency not to register a gain. It was quoted at $1.4350 in London, compared to $1.4362 on Wednesday.
Gold opened in London at a bid price of $324.20 an ounce, compared to late Wednesday’s $324.60. At mid-morning today, the city’s five major bullion dealers fixed a recommended price of $323.60.
Zurich Price Down
In Zurich, the bid price was $323.60, down from $324.50 late Wednesday.
Earlier, in Hong Kong, gold fell 43 cents to close at a bid $325.26.
In New York Wednesday, gold fell 50 cents to close at $323.80.
Silver was quoted in London today at a bid of $6.05 an ounce, down from Wednesday’s $6.10.