Dollar Tops 119 Yen, Best in 1 1/2 Years
The dollar rallied against the yen to its highest level in nearly 1 1/2 years Monday amid mounting worries over Japan’s fragile economy.
In stock trading, most foreign markets showed relatively modest changes, with Wall Street closed for the Martin Luther King Day holiday.
In foreign trading, the dollar topped 119 yen, up from 118.5 yen in New York on Friday, after Japanese Finance Minister Kiichi Miyazawa said Sunday that the recent rise in the dollar against the yen was not a “big deal,” saying it would not lead to a return of the 1997 Asian crisis.
“This is consistent with the recent official comments that appear to be a green light to sell the yen. U.S. officials have been quite circumspect, and without official resistance, the market is likely to continue to push the yen lower,” said Mellon Bank currency strategist Marc Chandler.
The dollar hasn’t been this strong against the yen since mid-1999. A dollar bought 107 yen in late June.
“We’ll probably go higher in the next couple of weeks, to 120 [yen] or even 124,” said Charlie Spratt, currency trader at Brown Bros. Harriman in New York.
The beleaguered Japanese stock market--where the blue-chip Nikkei 225 average now is barely above last week’s 27-month low--and its impact on the country’s fragile financial system were an additional concern to currency traders.
“With an exploding budget deficit and near-zero interest rates, Japan has little option but to tolerate a weaker yen to kick-start the economy,” said Jeremy Hawkins, chief economic advisor at Bank of America in London.
By allowing the yen to weaken, Japan makes its exports cheaper in the United States.
Tokyo stocks Monday appeared helped by the falling yen, as exporters’ shares rose. Comments from Prime Minister Yoshiro Mori that he wanted his party to consider ways to revitalize the stock market also lifted the mood.
Korea and Thailand also extended Friday gains, and Manila closed at a seven-month high after an interest rate cut, but in Hong Kong and Sydney the markets lacked drive.
Tokyo’s Nikkei index finished up 1.2% at 13,506.23 as it extended its recovery from Thursday’s 27-month low on Mori’s comments, which included a possible easing of restrictions on corporate share buybacks.
Early today in Tokyo, the Nikkei was up 0.3%.
Chunky gains for oil majors BP Amoco, Royal Dutch and Shell fueled a firmer close for European stocks Monday as the OPEC cartel met to discuss production cuts.
The German DAX index rose 0.5% to 6,522.87.
Today in Singapore, German Finance Minister Hans Eichel said that European growth could outpace the U.S. economy next year, and that the euro currency had further room to appreciate against the dollar from its current level of about 94 U.S. cents.
In Latin America, the Mexican market gained 0.5% to 5,998.02 on Monday, while Brazilian shares added 0.7%.
As Wall Street opens trading today, investors will be bracing for a slew of economic data and key fourth-quarter corporate earnings reports this week.
The Dow Jones industrials closed Friday at 10,525.38, down 84.17 points, or 0.8%. The Nasdaq composite index ended at 2,626.50, down 14.07 points, or 0.5%.
Nasdaq last week put together its first three-day rally since August, though the streak ended with Friday’s modest decline.
