Tokyo stock and exchange markets, already torn by turmoil, resumed their downward spiral Friday after a one-day reprieve caused by a report that Japan’s Finance Ministry was urging institutional investors to cut back purchases of dollar-denominated securities.
A report Thursday that Finance Ministry officials were trying to persuade insurance companies and trust banks to reduce investments in the United States, with Treasury bonds a particular target, gave the yen close to a 2-point shot in the arm. But the Japanese currency declined in value Friday for the 10th time in the past 11 trading days to close at 157.65.
No intervention by the Bank of Japan was reported.
Tokyo stocks, which dipped only slightly Thursday, on Friday suffered their seventh-largest loss ever for a single day as the Nikkei 225-stock average closed at 29,980.45, down 1,045.71 points. Six of the 10 worst days in the market’s history have now occurred since Feb. 21.
Meanwhile, three more corporations dropped plans on Friday to increase issuance of stocks, bringing to 19 the number of firms that have pulled back from raising additional capital in the Tokyo market since it started plunging in earnest in late February.
One executive of a large trust bank, speaking on the condition that he not be identified, said Finance Ministry jawboning regularly occurs “when markets are in turmoil.”
Another banker, also requesting anonymity, confirmed that Finance Ministry officials have consulted large institutional investors but refused to comment further. Fiscal 1989 ends today in Japan.
Any withdrawal of Japanese funds from the United States or a reduction in Japanese investments in Treasury notes would threaten to drive up interest rates in the United States. Indeed, in the wake of Thursday’s report in the Mainichi newspaper, prices quoted for the benchmark 30-year U.S. Treasury bond plunged sharply, driving up its yield to 8.58%.
On Tuesday, however, Shoji Yamada of the asset management department of Yasuda Trust & Banking Co. said his bank had increased its holdings of foreign stocks and bonds since the beginning of 1990.
Finance Ministry officials were reported unhappy with the refusal of U.S. Treasury Secretary Nicholas F. Brady to offer help in propping up the sagging yen when he met Finance Minister Ryutaro Hashimoto in Los Angeles on March 23.
“The United States is following a self-enrichment policy,” complained Hirohiko Okumura, senior economist of the Nomura Research Institute.
Okumura warned that the United States’ refusal to raise interest rates in the hope of sustaining economic growth and its willingness to let the dollar gain value--thus dampening U.S. inflation by lowering the cost of imports--eventually would precipitate an increase in Japanese exports and exacerbate the bilateral trade deficit.
The Tokyo Stock Market headed down again as the Finance Ministry announced that Japan’s trade and current account surpluses both plummeted in February.
The global trade surplus declined to $5.5 billion, compared to $8.5 billion for the same month last year, while current accounts dipped to a surplus of $4.9 billion, compared to $7.3 billion a year earlier. Although current accounts in January fell into the red, February marked the 12th straight month of year-to-year declines.
A nation’s current accounts measure the total of both trade and such non-trade transactions as insurance, freight and tourism.