Dollar Climbs Above 160 Yen as Tokyo Shares Fall

The dollar climbed to 160.35 yen in morning trading in Tokyo today, marking its highest level since December 1986.

The dollar was pushed up as the Tokyo stock market took a sharp plunge right after the opening, signaling what brokers expected to be a bad day.

The key 225-share Nikkei index lost 985.58 points, or 3.3%, to 28,994.87 after 48 minutes of trading. It had plunged 1,045.48 on Friday.

The selling in the stock market came on speculation that major financial institutions would sell vigorously to trim off deadwood in their portfolios.

A front-page story in the financial daily Nihon Keizai Shimbun predicted that major institutions would sell heavily today, the start of the new fiscal year in Japan. That apparently prompted new fears of a market meltdown.

The planned sales are a response to the market’s plunge, and to the fact that the proportion of stock holdings to total assets among insurers is nearing the upper limit of 30% set by the Finance Ministry, the newspaper said.

Early on, many stocks couldn’t trade because there were only sellers. “When more of these stocks open up, we’ll see the selling speed up,” said one broker.