Dollar Climbs Against Yen in Tokyo Trading : Scores Biggest One-Day Gain Since Group of Five Agreement Last Sept. 22

The dollar Wednesday scored its largest one-day gain in trading here since the finance chiefs of five major industrialized nations, including the United States, agreed last Sept. 22 to drive down its value.

Apparently spurred by Treasury Secretary James A. Baker III’s statement Tuesday that the dollar “has more than fully offset its earlier appreciation against the yen,” trading on the Tokyo Foreign Exchange Market sent the dollar shooting up by 4.55 yen before it slipped back 1.5 yen. It closed at 164 yen, an increase in value of 3.05 yen, or 1.9%, for the day. (In New York, the dollar closed at 163.40 yen.)

Baker’s statement, made to subcommittees of the Senate Finance and Banking committees, contrasted sharply with what he and President Reagan had said in rejecting Japanese pleas before and during the May 4-6 Tokyo summit for help in stemming the rapid appreciation of the yen.

Prime Minister Yasuhiro Nakasone, whose close personal relationship with Reagan had been one of the prime minister’s chief political assets here, has been subjected to sharp criticism from both businessmen and politicians, including rivals in his ruling Liberal Democratic Party, for failing to win U.S. help to curb the yen’s climb. Analysts were divided, however, as to whether Wednesday’s trading marked an end to the yen’s steep climb.

New Pressure for Cheaper Dollar

Kenjiro Hayashi, a director of the Nomura Research Institute, said the Baker statement might brake the appreciation of the yen “for two or three months.” But, with Japan’s monthly trade surpluses continuing to grow, new pressure for a still cheaper dollar and more expensive yen will develop in the latter half of the year, he predicted.

Other analysts, however, dismissed the Baker statement as “lip service” designed to bolster Nakasone’s political standing. They noted that the dollar failed to sustain its climb even during Wednesday’s trading.

Skeptics also noted that Baker’s statement was included in a text distributed to reporters in Washington and relayed to Tokyo by the U.S. Information Service but was omitted from the secretary’s actual remarks to the Senate subcommittees.

Last year, Japan recorded a $49.7-billion trade surplus with the United States. This year, the annual rate through April was running at more than $61 billion.

At a luncheon hosted by the American Chamber of Commerce in Japan on Wednesday, Satoshi Sumita, governor of the Bank of Japan, declared that “the need for mutual understanding between Japan and the United States has never been more important than now.”

Sumita warned the American businessmen that the yen’s rapid rise threatens to produce the opposite effect to the desired reduction in Japan’s trade surpluses, which precipitated the Sept. 22 agreement to drive down the dollar’s value.

“The speed of appreciation,” he said, “gives businessmen no time to adjust to the changes in the yen’s value. It is sapping enthusiasm for investment, which threatens to make the Japanese economy slow down, thus reducing imports and delaying the achievement of external balance,” he said.

At Wednesday’s closing price of 164 to the dollar, the yen had appreciated 48% in value against the dollar in less than eight months. Before Sept. 22, Japanese manufacturers received 242 yen for each $1 worth of products they sold overseas. Now, to earn the same 242 yen, they must export $1.48 worth of products.

Despite his plea for American “understanding,” Sumita also aimed a barb at Nakasone’s policies. Japan’s monetary authorities, he said, were being asked to bear “an excessive burden” in trying to fulfill what he called “a proliferation of policy goals.” He called increasing demand at home a “most urgent problem” and urged government action to produce it.

Sumita dismissed rumors that the bank would carry out a fourth reduction of its discount rate, declaring that three cuts so far this year in the interest rate that it charges on loans to private banks had “fully eased” monetary policy. The rate is now pegged at 3.5%, the lowest since World War II.