Tokyo Stocks Plummet Anew

Stocks opened the new Japanese corporate fiscal year with a steep dive today, as the dollar continued to decline.

By midday on the Tokyo Stock Exchange, the Nikkei-225 share index had fallen 709.98 points or 4.4% to 15,429.97. Other Asian stock markets also were sharply lower at midday.

The dollar, which had tumbled to a record low 86.60 yen in New York on Friday, fell to 86.50 in Tokyo early today, though both the Federal Reserve Board and the Bank of Japan intervened to buy dollars.

Japanese investors were disheartened Friday when the Bank of Japan declined to cut its official discount rate, a move that would in theory help weaken the mighty yen. The central bank said it is undecided about a rate cut, though it did push Japanese money market rates to record lows Friday.

Until the dollar recovers, investors worry that the earnings of Japanese companies that depend on exports will suffer. The dollar is already down nearly 14% against the yen so far this year.

Some analysts had hoped that investors would begin the new year by pushing fresh cash into downtrodden Japanese stocks. The Nikkei index has fallen from 19,723.06 at the start of the year. Instead, investors appeared to be putting available funds into Japanese bonds early today, driving yields down sharply.

The yield on 10-year Japanese government bonds fell to 3.42% by midday, down from 3.58% at Friday’s close.