Yen chops $US
NZPA New York The American dollar closed slightly higher against most major currencies on Friday, but fell close to its seven-year low against the yen on endmonth selling by Japanese investors.
Market perceptions of the yen as an intrinsically strong currency were bolstered by its ability to withstand speculation earlier on Friday that Japanese authorities are preparing to cut the 4.5 per cent discount rate in an effort to stimulate growth. The dollar ended at 191.50/60 yen compared with 192.45/55 on Thursday night but rose slightly to 2.3825/45 marks after closing on Thursday at 2.3730/40. Speculation about another cut in the Japanese discount rate stemmed from remarks by the Prime Minister, Mr Nakasone, predicting growth of 4 per cent this year. The pound closed at 5U51.4115/25 after ending Thursday at 5U51.4210/ 20. But the pound slipped against other currencies, closing at 3.3650 marks, compared with 3.372 on Thursday. Also weighing on sterling were /higher British unemployment data released yesterday, which make it that much more difficult for the authorities to raise base rates in order to protect the currency, dealers said. Also suffering from the effects of weak oil prices was the Canadian dollar, which traded near its recent record lows. The dollar ended at $Can1.4250/55, compared with $Can1.4215/22 on Thursday and at 2.0235/55 Swiss francs after Thursday’s 2.0140/60 finish.
According to figures provided by Morgan Guaranty Trust Co, the dollar’s trade weighted average at midday on Friday was 13.7 per cent above its level in 1980-82 compared with 13.6 per cent on Thursday. Since the firmer yen is likely to create a drag on the economy by limiting exports, dealers surmised that monetary officials were considering relaxing
interest rates to stimulate growth, dealers said. “The sentiment has just turned against the dollar,” said one yen trader, adding that if it were unable to find support at 190, it was not clear where the decline would stop. But against other currencies, the dollar was able to post some small gains on short-covering.
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Press, 3 February 1986, Page 30
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335Yen chops $US Press, 3 February 1986, Page 30
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