Stocks Lower in Pacific Basin in Early Trading
The U.S. dollar fell in early tading this morning in the Pacific Basin and its continued weakness helped push Tokyo and Hong Kong stocks down, dealers said.
By noon in Tokyo, the dollar had dropped to 137.50 yen and 1.7307 West German marks in spite of big dollar-buying by the Bank of Tokyo to prop up the currency.
The Tokyo stock index ended the morning session 106.80 points, or 0.9%, after the morning session at 23,122.11 after two consecutive rises, and dealers said the weak dollar’s effect on Japanese exporters was a major factor in the decline.
In Hong Kong, the Hang Seng stock index rose slightly then dropped 14 points to 2,226 after nearly 90 minutes of trading.
Calmer Mood
The U.S. dollar opened at 137.70 yen on the Tokyo Foreign Exchange Market, down nearly 1 yen from Friday’s close of 138.55 yen, and dropped to 137.35 yen.
That cut short the dollar’s rebound Friday, when it gained form its closing Thursday of 137.55, its lowest in four decades.
“Nothing has changed,” said Alan Yamashita, foreign exchange manager of Goldman Sachs Corp. in Tokyo. “The dollar will be under pressure for the rest of the week.”
Currency dealers in Tokyo estimated the Bank of Tokyo bought about $500 million during the morning to stop the currency from falling further.
“The dollar is expected to be sandwiched by aggressive intervention by monetary authorities and strong selling pressure by operators trying to breach 136 yean,” said a senior dealer at a major Japanese trust bank.
Dealers said there was a growing belief that major Western nations would accept the dollar’s gradual decline.
Tokyo stockbrokers said the market’s mood was calmer than in recent weeks, particularly ahead of a national holiday on Tuesday.
Stock trading in Hong Kong was also very quiet compared to the past two weeks.
The Sydney stock market was up 67 points or 5% to 1,362 at mid-session, and brokers there said the solid share rises around the globe on Friday and a firmer Australian dollar were largely responsible.
