The dollar dropped to a record low of 174.80 yen on the Tokyo Foreign Exchange Market today, prompting Japanese Finance Minister Noboru Takeshita to appeal to the United States and West Germany to join Japan in intervening in exchange markets to stop what he called the “excessive speed” of the yen’s rise. Although the dollar rebounded slightly by 11:30 a.m.--to 175.75 yen--dealers said they fear that the yen would climb still more.
The increasing value of the yen makes Japanese goods more expensive in the United States and American goods cheaper in Japan.
Last month, when the dollar fell below 180 yen, Paul A. Volcker, chairman of the Federal Reserve Board, declared that depreciation of the dollar had reached “a danger point.” Unlike other U.S. officials, who argued for more appreciation in the yen’s value to help reduce America’s $49.7 billion trade deficit with Japan, Volcker told Congress that a continued decline in the dollar’s value threatened to induce foreigners, especially Japanese, to withdraw investments in the United States, a move that would lead to higher American interest rates.
By International Monetary Fund formula, which calculates the present value of the yen against the change from its earlier value, the 174.80 rate represents a 38.4% gain in the yen’s value since the finance ministers of the so-called Group of Five--the United States, Japan, West Germany, England and France--agreed in New York Sept. 22 to promote the value of non-dollar currencies.
Takeshita called a special news conference to declare that he had instructed Toshimitsu Oba, deputy finance minister for international affairs, to appeal to financial leaders of the other Group of Five nations, especially the United States and West Germany, to join Japan in intervening in foreign exchange markets to stop the “undesirable, excessive speed of appreciation of the yen.”
He said intervention by Japan alone would be insufficient to stop the decline of the dollar’s value.
It was the first time any Japanese official had publicly appealed for intervention to prop up the yen’s value since the Sept. 22 Group of Five agreement.
After record lows set by the dollar in the New York and London foreign exchange markets Friday, the dollar opened today in Tokyo at a record low of 175.40 yen and proceeded downward to 174.80.
The previous low was set Oct. 31, 1978, when a dollar fell as low as 175.50 yen and set a record for a closing price at 176.05.