Dollar Edges Up After Japan Gives It a $2-Billion Boost
The dollar was slightly higher against most key currencies in U.S. dealings Friday after falling in Europe as rising tensions within the eight-nation European Monetary System continued to dominate worldwide trading.
Earlier, in Tokyo, foreign currency dealers said the Japanese central bank spent more than $2 billion to boost the dollar to a closing 158.35 Japanese yen from Thursday’s 158.20 yen. Banking officials said it was the central bank’s biggest intervention ever in a single session. Tokyo trading ends before Europe’s business day begins. Later, in London, the dollar was quoted at 158.28 yen.
Central banks never comment immediately on their interventions, but Japanese Finance Minister Kiichi Miyazawa said Friday that his government will respond “with power” to speculative moves on the yen. He said of the yen’s latest rise that Japan “will respond without sparing money. In short, it will intervene.”
The strong yen worries Japanese officials because it makes their exports more expensive.
Dealers said the dollar had little reaction to government reports Friday showing the nation’s jobless rate fell to 6.7% in December, the lowest level in 1986, and wholesale prices remained steady that month.
“I’m a little surprised about that,” said Jonathan Francis, director of foreign exchange service for Wharton Econometrics. “But the general sentiment for the dollar has been bearish.
“The focus of the currency markets today is really centered in Europe.”
The European Monetary System, a mechanism for stabilizing European exchange rates, has been forcing Bonn to intervene heavily to narrow the gap between the rising West German mark and the falling French franc.
Dealers said West Germany’s Bundesbank bought more than 1 billion French francs Friday to keep the currency from falling below a lower level within the EMS.
The central bank also bought an estimated $40 million to $50 million in an unsuccessful attempt to prevent the U.S. currency from falling in Europe, dealers said.
In London, the dollar fell against the British pound. It cost $1.4755 to buy one pound, more expensive than $1.4720 late Thursday but cheaper than $1.4925 late last Friday. Later in New York, the pound fetched $1.4765 vs. $1.47855 Thursday.
Selected dollar rates in New York, compared with Thursday’s close, were: 1.91875 West German marks, up from 1.91445; 1.6060 Swiss francs, up from 1.6040; 1.3706 Canadian dollars, up from 1.3694; 6.39925 French francs, up from 6.3770; and 1,357.00 Italian lira, up from 1,354.00.
