Dollar Plunges to Record Low in Tokyo Trading

The U.S. dollar plunged to a record low on the Tokyo foreign exchange market Friday, closing the week at 125.20 yen, while stock prices closed lower after failing to recover from morning losses.

The dollar’s closing was 1.45 yen lower than Thursday’s finish of 126.65 yen. Its previous record low was reached Dec. 18, when the dollar closed at 126.45 yen.

Finance Minister Kiichi Miyazawa said the dollar’s fall in Tokyo would have little impact, however, since major money markets overseas were closed for Christmas.

The central bank stepped in to bolster the faltering dollar but failed to stem the trend, dealers said. They said the intervention was on a small scale.

After opening at 125.95 yen, the dollar ranged between 126 yen, the day’s high, and 125.10 yen, the U.S. currency’s lowest point in Tokyo since modern exchange rates were established in the late 1940s.

Traders said the dollar’s plunge reflected market leanings toward further declines in the value of U.S. currency against Japanese yen.

“Despite a recent joint statement by the Group of Seven major monetary nations, there still remains a persistent and strong sentiment in the market that the U.S. government was allowing the dollar to slip further,” said Nobuyuki Ueda, a senior economist at the Japan Long-Term Credit Bank.

The G-7 statement, issued Wednesday, pledged continued efforts to coordinate economic policies among its members and keep exchange rates stable, but many traders have said it produced no new policy moves to support the dollar.

“On a long-term basis, there still remains a market consensus for the dollar’s further slide,” said Seichiro Hirata of the Bank of Tokyo.